White House Considers Taking Stakes in US Banks

Well that was quick - we just touched on the UK plan yesterday, and said the US should (will) follow. Better to do it soon than in 6 months. It appears this is what "caused" the sell off in the last 30 minutes yesterday (along with a longer timetable to buy bad debts) as it took the market by surprise.

• The Bush administration is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis. An administration official, who spoke on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return. (interesting, must of snuck that in - I don't remember that mentioned during the debate - I guess when it goes from 3 pages to 110 pages to 400+ pages you can start throwing stuff in no one notices)
• This official said all the new powers granted in the legislation were being considered as the administration seeks to deal with a serious credit crisis that has caused the biggest upheavals on Wall Street in seven decades and continues to roil global markets.
• Taxpayers would benefit because the government would receive an equity stake in the bank in return for providing the capital. A decision to inject capital directly into financial institutions in return for ownership stakes would be similar to a plan announced Wednesday by Britain.
• Asked whether he would try something like the British plan, Paulson said: "We have a broad range of authorities and tools. ... We've emphasized the purchase of liquid assets, but we have a broad range of authorities. And I'm confident we have the authorities we need to work with going forward."