MercoPress. South Atlantic News Agency

Bipartisan support for US plan to purchase private bank equities

Two United States Treasury Secretaries James Baker and Lawrence Summers spoke out in favour of the need for the federal government to assume partial ownership of US banks during the Sunday morning television show “This week”.

"This is bigger than the private sector can fix by itself. Government is going to have to restore financial stability to our markets and to our economy" said Baker a former Secretary of the Treasury with the Ronald Reagan administration in the eighties. "And frankly, I think they have... taken some pretty good steps already." Earlier in the week, US Treasury Secretary Henry Paulson proposed that the federal government inject money directly into the banks and assume partial ownership. "We've got a problem of trust: financial institutions trusting each other; the whole economy trusting the government policy framework. And any time you have a problem of trust, you got to deal with it in a very aggressive way" Summers explained when asked about the need for a global coordinated action plan. Mr. Lawrence Summers, Harvard professor and former Treasury Secretary with President Bill Clinton has also been tipped as the main candidate for the job if Obama wins the election. "The core problem today is of assurance that your money in a financial institution is safe. The problem that banks are short of capital and need capital from some source, and if it has to be the government, that's better than their not having capital", he added.