WASHINGTON -- Taking a page from Britain's economic playbook, the U.S. Treasury Department is considering offering to buy shares in American banks in need of additional capital.
The plan, first reported in today's editions of The New York Times, would be voluntary. Banks would have to ask for the government to buy their shares. On Wednesday, the British government said it would offer banks up to $87 billion in additional capital and also provide money to shore up debt.
The bill passed by Congress last week to create a fund to buy illiquid assets from financial institutions contains a provision allowing such share purchases.
The option to buy bank shares would be the latest in a series of moves by the government to free up capital and contain the economic crisis.
Just this week, the Federal Reserve cut its main interest rate by a half a percentage point and announced it would pay interest on deposits from other depository institutions, including credit unions.
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