Bush copies PM's rescue package with $250bn stake

PRESIDENT Bush today ordered a dramatic change of policy by taking a $250 billion (£143 billion) share in the top US banks.

The US administration was expected to pump the cash into the financial institutions as fresh capital in return for preference shares a striking copy of Gordon Brown's rescue deal unveiled yesterday.

Unlike the British scheme, the American recapitalisation is being imposed on major banks so that none is seen to be singled out for special help.

Leaders of the main banks were summoned last night to be told the news by Treasury Secretary Hank Paulson. Wall Street insiders said the government is expected to buy equity stakes in Goldman Sachs Group Inc, Morgan Stanley, JP Morgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Co, Bank of New York Mellon and State Street Corp.

The move comes after the original US plan to buy up bad debts failed to lift the markets enough, forcing Mr Bush and Mr Paulson to reconsider their distaste for the notion of banks being part-bought by the state.

Only recently Mr Paulson was reported to have scorned the idea, saying: "That's what you do when you have failure."

Today's $250 billion investment will come out of the $700 billion approved by Congress to repair the financial system. Other elements are likely to include extra protection for certain bank deposits and state guarantees of some types of bank lending.

President Bush said: "These are tough times for our economies, yet we can be confident that we can work our way through these challenges and America will continue to work closely with other nations to coordinate our response to this global crisis." He was speaking after meeting Italian premier Silvio Berlusconi.

America's decision to adopt a virtual clone of the British plan is a further boost to Mr Brown, whose international standing has soared in recent days.