November 9, 2008
The Treasury Department is preparing to open its $700 billion bailout package to companies outside the traditional banking sector, the Washington Post reported on Friday.
- A d v e r t i s e m e n t
The initiative would make it easier for the Treasury Department to help a broader variety of firms if their troubles put the wider financial system at risk, the newspaper reported. However, the companies would still have to be financial firms that fall under federal regulators, it said, citing unnamed sources.
The plan, to be announced late next week at the earliest, could ultimately involve “hundreds of billions” of dollars in the $700 billion program, the Post said.
Companies best positioned to receive the government money may be those that resemble banks and engage in lending to businesses or consumers, the newspaper said. Treasury Department officials are evaluating which financial companies could become a bank or thrift holding company and remain viable in the long run, it said.
However, companies like GMAC, which finances auto purchases, could face difficulties because of a long-standing government rule that a commercial business cannot own more than 24.9 percent of a bank, the newspaper said. General Motors owns 49 percent of GMAC.