The US government is weighing the possibility of taking ownership stakes in banks to bolster its effort to restore confidence in financial markets, the White House confirmed Thursday.
US Treasury Secretary Henry Paulson has been granted the authority to buy stakes in the banks as part of the Bush administration's broad policy to rescue the financial sector, White House spokeswoman Dana Perino said.
"It would include an equity stake," Perino said, before adding "that is a part of the range of authorities that they were given."
The New York Times first reported the possibility in its Thursday edition, citing Treasury officials who said the 700-billion-dollar- bailout package allows them to inject cash directly into banks if requested.
Perino would not say whether Paulson has already moved to take control of stakes in any banks, which she called "capital injections that would actually be investing in banks, but not taking them over."
President George W Bush launched the largest US government intervention in history with his bailout package to stave off further economic damage caused by the crumbling financial industry.
The crisis has sparked a historic sell-off on Wall Street, plunging the stock market down by more than 30 per cent so far this year. The turmoil has spread to international markets and prompted swift action by European and Asian governments aimed at containing the damage and Bush has been on the phone with foreign leaders.
The crisis will be the main topic at an annual gathering of G7 finance ministers in Washington on Friday. The ministers from the seven leading democratic and economic powers will meet with Bush on Saturday.
Shares fell 2.1 per cent Friday on the Seoul stock exchange on general recession fears. South Korea's won dropped against the dollar.
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