U.S. eyes bank equity stakes as world looks to G7
By Daniel Trotta and Karey Wutkowski
NEW YORK/WASHINGTON (Reuters) - The United States moved closer to taking equity stakes in banks on Thursday ahead of a G7 meeting of economic powers trying to stave off world financial ruin.
The Treasury Department plans to start directly injecting capital in U.S. banks as soon as the end of October, according to a financial policy source familiar with Treasury Secretary Henry Paulson's thinking.
It would be the latest step to combat the widening financial crisis in which major economies have rescued banks, injected massive amounts of liquidity into markets, agreed to take toxic debt off the books of financial institutions and slashed interest rates.
South Korea and Taiwan cut interest rates on Thursday following the coordinated cuts on Wednesday by major central banks including the U.S. Federal Reserve. Japan was considering other measures in the face of new recessionary signals.
Even so, U.S. stocks were largely trading down on Thursday and investors were still calling on politicians from the G7 and European Union to show they can cooperate more effectively.
The Dow and the S&P 500 were down more than 1 percent, diminishing hopes Wall Street would end a six-day losing streak in which share prices fell almost 15 percent.
European stocks lost more than 2 percent after trading higher much of the day.
Finance ministers and central bankers from the Group of Seven major industrial nations will meet in Washington on Friday, with International Monetary Fund Managing Director Dominique Strauss-Kahn calling for more coordination. Continued...