President Bush has announced that the US government will spend the equivalent of 185 billion euros buying shares in US banks.
The part nationalisation is to help them with losses from the financial crisis.
Bush told reporters: “I am announcing new measures America is taking to implement the G7 action plan and strengthen banks across our country. First, the Federal government will use a portion of the 700 billion dollar financial rescue plan to inject capital in the banks by purchasing equity shares.”
Bush said the banks will buy back those shares back and the government isn’t taking over the free market but preserving it.
Federal reserve Chairman Ben Bernanke said they will not stop until the job is done: “Our strategy will continue to evolve and be refined as we adapt to new developments and the inevitable setbacks. But we will not stand down until we have achieved our goals of repairing and reforming our financial system and thereby restoring prosperity to our economy.”
The US government told the bank bosses they had to accept this plan “for the good of the US economy.” Participating banks will have limits imposed on their executive’s pay and so-called golden parachutes.
On the streets of the US financial capital, New York, people were philosophical. One man said: “This has been brewing for years. To say that they are going to solve it in what, a matter of six months to a year, it’s not going to happen, it’s going to take a while longer.
And on Wall Street they are aware that this is a long and difficult process and even though the banks may have been saved the economic gloom continues and a painful recession still looms.