Treasury Injects Cash Into Banking System

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The U.S. Treasury has cleared the way for banks to start lending again. Nine major financial institutions this week will receive $125 billion. In addition, more than a dozen regional banks will share part of another $125 billion from the government.


The government is close to taking a stake in some of the country's biggest banks. The U.S. Treasury is about to inject billions of dollars into the banks as part of its financial rescue strategy. NPR's Tamara Keith has more.

TAMARA KEITH: The Treasury plans to spend up to $250 billion taking ownership stakes in banks. Half that money went to nine large banking firms. The rest will go to smaller regional banks. So far, the list of banks includes Capital One, PNC, SunTrust, Fifth Third, and Comerica. These agreements add up to more than $34 billion, and several more are expected to be announced soon. The idea is to boost lending to consumers and businesses which has slowed to a trickle in recent months. Scott Talbott is the chief lobbyist for the Financial Services Roundtable which represents the nation's largest financial institutions.

Mr. SCOTT TALBOTT (Chief Lobbyist, Financial Services Roundtable): The bulk of this money will be lent directly to consumers for car loans, for student loans, for credit cards, for homes, and to small businesses for inventory, payroll, and other business purposes.

KEITH: This last point is proving to be controversial. Some banks seem to be more interested in buying up competitors than in making loans right now. Tamara Keith, NPR News, Washington.

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