The world banking system showed signs of pulling back from the brink of disaster yesterday with a tangible easing of stress across credit markets as the US government unveiled a historic rescue plan for its banks.
The plan included $250bn for bank recapitalisation, an idea so at odds with the US free market tradition that even Hank Paulson, its author, admitted it was “objectionable”, and a sovereign guarantee for new bank debt – the most sweeping government intervention in the financial sector since the Great Depression.
The US Treasury secretary said: “Government owning a stake in any private US company is objectionable to most Americans, me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.”
Financial Times
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