Treasury May Expand Rescue Plan to Private Banks

The U.S. Treasury Department met with privately held banks Tuesday to discuss ways they could get access to funds from the government's $700 billion financial rescue program, a source briefed on the matter told Reuters.

A Treasury Department spokeswoman declined to comment directly, saying Treasury officials have indicated they intend to include privately held banks in the federal rescue.

On Oct. 23, Neel Kashkari, Treasury's interim manager for the rescue program, told a congressional hearing the department was "working hard to finalize and publish the required legal documents so private banks can participate as well on the same economic terms as public banks."

Under the authority of a $700 billion financial bailout plan approved by Congress and signed by President Bush earlier this month, the Bush administration plans to dole out $250 billion to banks in return for partial ownership.

Treasury, which is overseeing the massive capital injection program along with the rest of the bailout, will pour $125 billion into nine of the country's largest banks this week.

The decision to give billions in rescue money to large banks has created concern among smaller banks that the government is encouraging consolidation of the industry at their expense, the Journal said.

- AP contributed to this report.

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