Top U.S. banks agree on backup fund for markets: report

The Citigroup sign is seen outside the Citigroup Center in New York, October 1, 2007. The top three U.S. banks, including Citigroup Inc., have agreed on the structure of a backup fund of at least $75 billion to stabilize credit markets, The New York Times reported on Sunday.

NEW YORK (Reuters) - The top three U.S. banks have agreed on the structure of a backup fund of at least $75 billion to stabilize credit markets, The New York Times reported on Sunday.

Citing a person involved in the discussions, who spoke on condition of anonymity, the Times said that Bank of America (BAC.N), Citigroup Inc. (C.N) and JPMorgan Chase & Co. (JPM.N) officials reached agreement late on Friday, approving a more simplified structure than had been proposed during the course of some two months of negotiations.

"We cleared all the big hurdles," the newspaper quoted its source as saying. "We agreed to a much simpler structure that we think can get done, rather than optimize it for everyone," the person added.

Discussions began in early autumn when the U.S. Treasury Department convened a meeting.

Previous versions of a backup fund had been widely considered infeasible, spurring doubts about the prospect for a final plan, the Times said.

The proposed fund could begin operating by the end of the year, the newspaper reported, and the banks could start asking some 60 financial institutions to contribute to the fund in the next five to 10 days.

Treasury Department officials declined to comment, the newspaper said.

The fund is meant to avoid a severe credit market disruption, according to its organizers, by either providing time for asset prices to recover or, more likely, at least discourage structured investment vehicles from unloading their holdings en masse, the Times said.

The fund also needs the major credit rating agencies' blessings.

(Reporting by Chris Michaud; editing by Patricia Zengerle)