WASHINGTON — The Bush administration announced today it will buy $250 billion worth of shares in the nation's leading bank companies.
The program, designed to improve the flow of capital, also includes insuring all deposits in non-interest bearing bank accounts through 2009. Credit unions are not mentioned in the Treasury Department fact sheet on the program. NCUA officials could not be reached for comment.
Under the plan, the government will buy preferred equity stake in seven large banks with the option to buy shares in other banks in the future. Banks that participate agree to limits on executive compensation and strengthen their efforts to help consumers avoid foreclosure.
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"This is an essential short-term measure to ensure the vitality of the American banking system," President Bush said when announcing the plan.
The government is set to buy preferred equity stakes in: Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street Bank and Wells Fargo.
The funds are coming from the $700 billion economic stabilization measure that Congress passed two weeks ago. That bill increased the amount of deposits covered at credit unions and banks to $250,000 through 2009.
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