WASHINGTON, April 20 (UPI) -- The U.S. Treasury could be ready to convert its multibillion-dollar bailout purchases from preferred shares to common stock, administration officials said.
Similar to the conversion made for Citigroup Inc., the Treasury is open to the idea of changing its strategy, which would provide more capital for struggling firms, The New York Times reported Monday.
The switch would also give the government voting rights among banks accepting bailout funds. Subsequently, it would also increase the taxpayers' risk.
Critically, however, it would allow for the administration to increase aid without going back to Congress to ask for additional money.
Officials estimate the Treasury will have about $134.5 billion left in the bailout package after using about $150 billion to buy toxic assets and help U.S. homeowners.
White House Chief of Staff Rahm Emanuel said this week, "if they (banks) need capital, we have that capacity."
The unknown factor at this point is the results of the bank stress-tests, which are due at the end of the month. The Treasury's tests could signal a need for more funding.
Congress, however, may be reluctant to approve more funding after bailed-out companies continued to dole out lavish bonus checks to executives at firms that were losing billions.
