U.S. Government To Invest $250 Billion in Thousands of Banks

By: • Mon, Oct 13 2008, 8:19 PM

The U.S. Treasury says it will outline the seemingly massive bank rescue plan formulated Monday in a press conference, to be held at 8:30 a.m. Tuesday morning in Washington.

According to a Wall Street Journal report, the plan will include a government purchase of equity stakes in nine top financial firms. The government also plans to invest up to $250 billion in potentially thousands of banks, according to people familiar with the talks.

Headlines streaming accross Bloomberg news said the government will take $25 billion in stakes of Citigroup, Bank of America and JPMorgan, as well as $10 billion in Goldman Sachs. Bloomberg said the government will also invest in Morgan Stanley, Bank of New York and State Street.

The move copycats decisions made by European governments earlier this week. The news out of Europe delivered a hefty boost to global stock markets today, seeing the Dow Jones rise its most in 75 years.

Also tomorrow, the Federal Deposit Insurance Corp is expected to lift insurance limits for non-interest bank deposit accounts.

Treasury secretary Henry Paulson said on Monday that his plan is "comprehensive" and will help banks and markets, and that he plans to help "restore functioning" of credit markets.