Banks see bailout as ticket to expansion

WASHINGTON, Oct. 22 (UPI) -- Three U.S. banks participating in the $250 billion equity for cash bailout said they might use the money to purchase other firms.

J.P. Morgan Chase, BB&T and Zions Bancorporation have said recently they are considering using the capital raised in the bailout to expand their holdings, The Washington Post reported Wednesday.

U.S. Treasury Secretary Henry Paulson Jr. told the Post in an interview Tuesday that the goal of the program was to "have our … healthy banks be well-capitalized."

But, he said, "there will be some situations where it's best for the economy and for the banking system for there to be a consolidation."

Advocates for new mergers say purchases could save weaker banks. Large banks also tend to have larger cushions against failure, the Post reported.

Nobel prize-winning economist Joseph Stiglitz said the trend toward larger banks "is a very serious problem."

Part of the program's "exit strategy" should include "breaking up some of the big banks," Stiglitz told members of the U.S. House of Representatives Financial Services Committee.