U.S. Mulls Expanding Rescue to More Firms

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.

Bond insurers and specialty finance firms such as

General Electric's

(GE) - Get Report

GE Capital unit and

CIT Group

(CIT) - Get Report

would be the focus, the

Journal

reports, citing people familiar with the matter.

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) - Get Report

and

Bank of America

(BAC) - Get Report

. 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."

This article was written by a staff member of TheStreet.com.