WASHINGTON, Oct. 21 (UPI) -- The U.S. Treasury's $250 billion equity purchase plan includes a strategy of strengthening banks to position them for mergers, senior officials said.
"Treasury doesn't want to prop up weak banks. One purpose of this plan is to drive consolidation," one of the unnamed officials told The New York Times.
"We think there will be pressure behind the scenes by Treasury to push together companies that should have merged months or years ago," said banking analyst Gerard Cassidy of RBC Capital Markets. "If you can create stronger companies, that is a positive," he said.
U.S. Treasury Secretary Henry Paulson Jr. said Monday that the selection process for the remaining $125 billion rescue aid wouldn't be implemented on a "first-come, first-served basis." He also said a "broad group" of banks had expressed interest in the program.
Nine of the largest U.S. banks absorbed the first $125 billion.
But, the selection process for the rest would include propping up regional banks, such as KeyCorp of Cleveland, Fifth Third Bancorp of Cincinnati and other for mergers, the Times reported.
Given the accelerated financial meltdown in recent months, there are a number of banks willing to sell themselves, the Times reported.
