The U.S. Treasury announced guidelines for dealing with financial institutions in need of rescue. The details are based on the Nov. 23 decision to loan $5 billion to Citigroup.
The Treasury said eligibility for the program will be considered on a case-by-case basis - there is no deadline for participation.
"The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security," a Friday press release said.
"In an environment of high volatility and severe financial market strains, the loss of confidence in a financial institution could result in significant market disruptions that threaten the financial strength of similarly situated financial institutions and thus impair broader financial markets and pose a threat to the overall economy," the release continued.
Eligibility in the program will be determined by the extent to which the institution's instability could threaten the financial system, and whether a firm's potential demise would alter confidence in the markets.
The release said that under the Emergency Economic Stabilization Act, the Treasury "may invest in any financial instrument, including debt, equity, or warrants, that the Secretary of the Treasury determines to be a troubled asset."
The report said taxpayers' interests will be protected when considering investments into ailing institutions.
By Patrick McGee and edited by Sarah Sussman
©CEP News Ltd. 2009