Click to play videoNew Delhi: The US Treasury will pump $250 billion into banks in return for preference shares. That’s step three of the bailout being executed, as promised by the US government.
The money will be put into nine of the biggest banks in the US. As initial reports say, the recipients may be Citigroup, Goldman Sachs, Wells Fargo, JP Morgan Chase, Bank of America, Merrill Lynch, Morgan Stanley, State Street and Bank of New York-Mellon.
Participating banks will have to agree to a $500,000 cap on CEO compensation and a ban on golden parachute payments.
The move follows pledges of more than $1.36 trillion by the governments of Britain, Germany, France and other European countries to bolster their banks.
US President George Bush has talked about the $700 billion bailout package easing the credit crunch in the US markets. Amongst the measures taken, the US government will guarantee most new debts issued by banks.
On Tuesday, Washington outlined three new initiatives to aid financial institutions to wrangle free of the historic credit crunch that has frozen lending around the world.
US government will recapitalise the banks as step one of the measures, provide federal guarantees on new bank debt for three years and give a FDIC insurance to non-interest bearing accounts.
Similar steps have been taken by the other Group of Seven nations at their national levels to beat the credit crunch.
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