Paulson to Banks: Do It for Your Country

$250B bailout needed to restore faith, keep capital at home
By Clay Dillow,  Newser Staff
Posted Oct 14, 2008 1:00 AM CDT
Keeping up with the Joneses; Secretary Paulson told big banks that a move similar to Europe's is needed to keep investment from flowing overseas.   (AP Photo/Charles Dharapak)
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(Newser) – The $250 billion plan to guarantee new bank debt and unlimited bank deposits in certain accounts isn’t just an option, Treasury Secretary Paulson told the chiefs of nine banks yesterday; it’s for the good of the country. The plan, the country’s response to similar European banking actions, is engineered to quash feats that US banks will default and keep capital from flowing overseas to safer banks, the New York Times reports.

“The Europeans not only provided a blueprint, but forced our hand,” Kenneth Rogoff, a Harvard economist and McCain adviser, said. “We’re trying to prevent wholesale carnage in the financial system.”