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The department mulls injecting cash directly into banks that request it. Such a move would quickly strengthen banks' balance sheets and persuade them to resume lending, a media report said, citing government officials.
In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones. The Treasury plan, still in preliminary stages, resembles one announced on Wednesday in Britain, the 'New York Times' said, adding under that plan, the UK government would offer banks like the Royal Bank of Scotland, Barclays and HSBC holdings up to USD 87 billion to shore up their capital in exchange for preference shares.
It also would provide a guarantee of about USD 430 billion to help banks refinance debt.
The American recapitalisation plan, officials were quoted as saying, has emerged as one of the most favoured new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.
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