FACTBOX: Financial rescue plans by G7 and other countries

Thu Oct 16, 2008 11:36am EDT
 
[-] Text [+]

(Reuters) - The world's richest nations have vowed to prevent vitally important banks from failing and to unfreeze credit markets in a bid to halt panic in financial markets.

Some $3 trillion has so far been committed to bailing out the financial sector, and on Wednesday European leaders pressed for an overhaul of global financial structures as signs of a worldwide recession mounted.

The news follows a decision by the United States on Tuesday to inject up to $250 billion into financial institutions as part of a rescue plan aimed at restoring normality to the markets and laying the groundwork for an economic recovery.

Below are details of the financial rescue plans already in place or under consideration by leading countries:

UNITED STATES - $700 billion plan, excluding Fed programs:

- BANK CAPITAL: The U.S. Treasury will inject $250 billion into qualifying financial institutions, with stakes limited to $25 billion or 3 percent of risk-weighted assets. Nine banks have said they will accept government stakes.

- BAD ASSETS: The Treasury can buy up troubled mortgage assets from financial institutions.

- BANK DEPOSITS: Insured up to $250,000 per account. The Treasury can lend an unlimited amount to the bank insurance agency to ensure depositors in failed banks are repaid.

- ACCOUNTING: Securities regulators can suspend mark-to-market accounting, blamed by critics for forcing financial institutions into insolvency when the market value of illiquid assets plunge or are unknown.

- LIQUIDITY- Federal Reserve operating various liquidity measures up to $900 billion, plus a commercial paper program, and loans to individual companies like AIG and JPMorgan.

UNITED KINGDOM - 400 billion pounds ($691 billion)

- BANK CAPITAL: UK government to inject 37 billion pounds ($64 billion) capital into three major banks -- RBS, HBOS and Lloyds TSB -- in the form of preference shares and as shares underwritten by the government.

- GUARANTEE INTER-BANK BORROWING: UK government will guarantee about 250 billion pounds ($439 billion) in short- and medium-term borrowing by banks.

- LIQUIDITY: Bank of England to lend banks at least 200 billion pounds ($351 billion) via auctions to make sure banks have enough cash to operate. This doubles its existing liquidity auctions and is in addition to three-month sterling and one-week dollar auctions.

GERMANY - 500 billion euros ($680 billion)

The German cabinet approved a banking sector rescue package on Monday with the following features:  Continued...

 

Commentary

A combination photo shows (L-R) New York Mayor Michael Bloomberg, conservative commentator Lou Dobb and former Alaska Governor Sarah Palin in file photos.  REUTERS/Staff
Do these people have reason to smile?

Will the dreary economic New Normal create a political opening for Lou Dobbs, Michael Bloomberg or Sarah Palin -- or someone else with high visibility, deep pockets or both?  Blog 

Editor's Choice

A selection of our best photos from the past 24 hours.  Slideshow 

Most Popular on Reuters

  • Articles
  • Video

Analysis

A street lamp is seen in front of the Datong second coal-fired power plant at night on the outskirts of Datong, Shanxi province, November 20,2009.  REUTERS/Jason Lee
China climate goal faces test of trust

Three little letters could spell big trouble for global climate change negotiations even after China, the world's biggest emitter of greenhouse gases, announced its first firm goals to curb emissions.  Full Article