Monday, October 27, 2008

Bailout Bill May Expand to Cover Wide Range of Industries

The $700 billion bailout bill may soon be expanding to include a wider variety of industries, as insurers, automakers and American subsidiaries of foreign banks claim that they too need financial support as a result the credit squeeze and dire state of the economy.

The Financial Services Roundtable wrote Treasury officials Friday requesting that the plan to buy $250 billion in bank stock include insurers, automakers, securities dealers and U.S. subsidiaries of foreign companies, including banks.

The Emergency Economic Stabilization Act allows Paulson to invest in any financial institution - including insurance companies. However, when the Treasury drafted rules for spending the first $250 billion to recapitalize banks, the program was limited to banks and bank holding companies. Treasury officials would have to redraft the rules for the program or create a new one in order to buy stock in insurance companies.

Read more here.

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