U.S. planning to buy bank stocks

U.S. planning to buy bank stocks
Treasury planning a program to attract private capital alongside public capital to financial institutions.
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See all CNNMoney.com RSS FEEDS (close) By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: October 10, 2008: 7:39 PM ET

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NEW YORK (CNNMoney.com) -- Treasury Secretary Henry Paulson said on Friday that the U.S. government was working on a plan to buy stock in financial institutions by using part of the $700 billion authorized by Congress to stabilize banks.

"We are working to develop a standardized program that is open to a broad array of financial institutions," Paulson said.

"Such a program would be designed to encourage the raising of new private capital to complement public capital," he said following a meeting of G-7 finance ministers and central bankers.

Any shares purchased by the U.S. government would be non-voting shares except, he said, "with the respect to the market standard terms to protect our rights as investors."

Paulson said that developing a standard program is the best way to "use taxpayer dollars more efficiently and have it go farther."

He didn't specify what the government's terms would be for companies that take part in the capital injection program.

"We're working as quickly as possible to unveil the capital plan," Paulson said. "We're going to do it as soon as we can do it right. We're working around the clock."

First Published: October 10, 2008: 6:56 PM ET

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