New York, Nov 04: The US Treasury Department is
considering using more of its USD 700-billion rescue fund to
buy stakes in a broad range of financial companies apart from
banks and insurers, after tentative signs of the programme's
success, a media report said on Tuesday.
In focus, said the Wall Street Journal, are companies
that provide financing to the broad economy, including bond
insurers and speciality finance firms such as General Electric
Co's GE Capital unit, CIT Group Inc and others.
The paper said and quoted people familiar with the matter
as saying that the treasury may scrap part of the early plan
--purchasing financial institutions' hard-to-sell assets such
as mortgage-backed securities through an auction process-- and
instead purchase some of these distressed assets directly.
Of the original USD 700 billion made available to the
treasury, officials set aside USD 250 billion for equity
investments. It has already invested USD 163 billion in a
range of banks including some of the nation's largest, such as
Goldman Sachs and Bank of America. That number might expand at
the expense of the asset-purchase plan, but by exactly how
much is unknown, the Journal reported.
"We are looking at many ideas for strengthening the
financial system and for restoring lending," Jennifer
Zuccarelli, a treasury spokeswoman, was quoted as saying. "We
are weighing ideas and have made no decisions."
Treasury's planning, said the paper, could be complicated
by Tuesday's election as Paulson wants to involve the next
administration in major decisions between now and January.
Both John McCain, the Republican nominee and Barack
Obama, the Democratic nominee voted for the USD 700-billion
rescue plan but a new administration is certain to have its
own ideas about how best to use the remaining USD 450 billion,
the Journal said.
Bureau Report
First Published: Tuesday, November 04, 2008, 00:00