Government moves again to unclog credit lines [October 15 2008]

The US Government put itself four-square into the country's banking business yesterday, resorting to what President Bush conceded was the unwelcome choice of a partial nationalization in order to loosen paralyzed channels of credit.

The president said the decision to to buy shares in the nation's leading banks — a kind of federal intervention not seen since the Depression era — was "not intended to take over the free market but to preserve it." Said Treasury Secretary Henry Paulson: "We regret having to take these actions. Today's actions are not what we ever wanted to do — but today's actions are what we must do to restore confidence to our financial system."

Nine major banks will participate initially including all of the country's largest institutions, he announced, in a move that sent stocks soaring on Wall Street. Some of the nation's largest banks had to be pressured to participate by Treasury Secretary Henry Paulson, who wanted healthy institutions that did not necessarily need capital from the government to go first as a way of removing any stigma that might be associated with banks getting bailouts.