The federal government plans to spend $250 billion to buy equity stakes in troubled banks to help them weather the credit crisis.
The money for the preferred shares will come out of the recently approved $700 billion financial rescue package. Nine financial institutions have agreed to take part in the program, including Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, J.P. Morgan Chase, Merrill Lynch (which is in the process of being acquired by Bank of America), Morgan Stanley, State Street and Wells Fargo. The capital infusion comes after meetings over the weekend among the Group of Seven nations, which agreed on a coordinated strategy to deal with the global credit crisis.
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