U.S. Is Investing $250 Billion in Banks

According to President Bush, “This is an essential short-term measure to ensure the viability of the American banking system.”

The proposal would make $250 billion available to banks — nine have already been identified — in order to help recapitalize those banks and to get them lending again, among themselves and to businesses and consumers.

With the proposal, the United States follows similar plans announced Monday across Europe — almost all intended to inject money into the banks and unfreeze the credit markets.

In addition to injecting money into the banks, according to the plan, the United States would also guarantee new debt issued by banks for three years — a measure meant to encourage the banks to resume lending to one another and to customers.