Bailout has bank stakes, more FDIC action

WASHINGTON, Oct. 14 (UPI) -- A $250 billion direct stake in banks is among the planks included in the $700 billion bailout plan for the U.S. financial system, President Bush said Tuesday.

Concerted action by his administration and Congress will "shore up struggling institutions and stabilize our markets," Bush said when outlining the rescue plan. "And the United States has worked with partners around the world to coordinate our actions to get our economies back on track."

Buying small stakes in financial institutions "will help struggling banks fill the hole created by losses during the financial crisis, so they can resume lending and help spur job creation and economic growth," Bush said.

He said he directed the Federal Deposit Insurance Corp. to immediately guarantee most new debt issued by insured banks temporarily. The FDIC also will immediately expand government insurance to cover all non-interest-bearing transaction accounts, also a temporary measure.

The U.S. Federal Reserve soon will finalize a new program to act as a "buyer of last resort" for commercial paper, a key source of short-term financing for U.S. businesses and financial institutions, Bush said, helping businesses meet payroll, buy inventory and "invest to create jobs."

"It'll take time for our efforts to have their full impact but the American people can have confidence about our long-term economic future," Bush said. "We have a strategy that is broad, that is flexible, and that is aimed at the root cause of our problem."