US May Buy Equity in More Firms

After seeing some thawing in key credit markets, Treasury may expand program
By Clay Dillow,  Newser Staff
Posted Nov 4, 2008 8:21 AM CST
Republican presidential candidate Sen. John McCain has been a proponent of buying up bad mortgages to relieve homeowners, allowing them to refinance at better rates.   (AP Photo/Carolyn Kaster)
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(Newser) – Treasury is considering using some of the $700 billion at its disposal to buy stakes in a range of financial companies beyond banks, the Wall Street Journal reports. The idea comes after seeing measured success in thawing credit markets by taking equity stakes in several banks. Treasury may also abandon its plan to buy troubled assets from banks at auction, instead purchasing those directly.

Treasury set aside $250 billion for equity investments, and after investing $163 billion in several large banks, it may increase that program at the expense of the asset-purchase plan. Credit markets appear to be loosening, especially in the hard-hit short-term funding markets, analysts say. But today’s election may complicate matters, as both candidates have expressed some degree of support for purchasing bad assets.