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See What People Are Saying About... Gov't Stakes In Banks

Tuesday, 14 Oct 2008 | 12:30 PM ET

The US government outlined three new initiatives to aid financial institutions amid a historic credit crunch that has frozen lending around the world.

The moves fundamentally change the nation's historic hands-off relationship between government and the private sector.

The latest plan calls for a recapitalization of banks, federal guarantees on new bank debt for three years and FDIC insurance for non-interest bearing accounts, mirroring measures taken by other members of the Group of Seven nations.

Under the plan, the US government would take $25 billion in preferred stock in Bank of America (BAC), Wells Fargo (WFC), Citigroup (C), JPMorgan Chase (JPM), Goldman Sachs (GS), Morgan Stanley (MS) and Bank of New York (BK), State Street (STT) and Merrill Lynch (MER).

Treasury Secretary Henry Paulson said the banks— described as "healthy institutions"—had agreed to accept government stakes to help protect the U.S. economy.

In a news conference Tuesday, Paulson added that government stakes in private businesses was objectionable, but there was little choice in the matter.

And that leads to the Fast Money Reader Poll. Must the government do whatever they feel necessary to restore confidence in our financial system or have they gone too far?

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