Treasury plan to inject $125 billion in top 9 banks

WASHINGTON (Reuters) - The U.S. Treasury plan is expected to inject $125 billion of capital into the top nine U.S. banks as part of a larger voluntary $250 billion capital infusion to restore confidence into credit markets and ease the turmoil in the global financial system, according to a source briefed on the matter.

Details of the plan are expected to be unveiled on Tuesday, when the Bush administration will also reveal intentions to allow the Federal Deposit Insurance Corp to insure senior preferred debt issued by banks and thrifts for three years, the source said.

The FDIC would also be allowed to lift the insurance limits for non-interest bearing bank accounts, according to the source.

The nine U.S. banks had to be convinced to participate in the plan. "There was some arm twisting," the source said.

(Reporting by Rachelle Younglai; Editing by Gary Hill)