Here Comes the New Bailout Plan

Paulson will match Europe's effort by spending $250B on stock in 9 banks
By Neal Colgrass,  Newser Staff
Posted Oct 13, 2008 5:40 PM CDT
U.S. Treasury Secretary Henry Paulson shake hands with British Chancellor of the Exchequer Alistair Darling Saturday, Oct. 11, 2008, in Washington.   (AP Photo)
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(Newser) – The US version of Europe's new financial bailout plans is coming tomorrow, the Wall Street Journal reports. In the wake of a rollout by European nations today, and soaring stock markets worldwide, Washington will do what it dissed only weeks ago: snap up billions in bank equity stakes. The FDIC will also raise insurance above $250,000 on some bank accounts and backstop bank-issued debt.

The Treasury is expected to spend $250 billion of its $700 billion bailout bill on preferred equity stakes in nine major banks. Not all bank chiefs liked the move, but met with Henry Paulson in Washington today and faced the music. BofA's Ken Lewis, JP Morgan's Jamie Dimon, and Goldman Sachs' Lloyd Blankfein were among those at the meeting.