The Treasury Department is considering using more of its $700 billion rescue fund to buy stakes in a broad range of financial companies, not just banks and insurers, the Wall Street Journal reports.
Treasury Secretary Henry Paulson in September unveiled a plan to buy up hard-to-sell assets of financial institutions such as mortgage-backed securities. But that proposal has yet to begin running, and the department may scrap part of that early plan -- purchasing assets through an auction process -- and instead purchase some of the distressed assets directly, the newspaper reports.
Of the original $700 billion, officials set aside $250 billion for equity investments. It has already invested $163 billion in a range of banks including Goldman Sachs (GS) and Bank of America (BAC). That number will likely expand at the expense of the asset-purchase plan, but by exactly how much is unknown, according to the Journal."We are looking at many ideas for strengthening the financial system and for restoring lending," said Jennifer Zuccarelli, a Treasury spokeswoman, the Journal reports. "We are weighing ideas and have made no decisions."
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