
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.