U.S. Treasury To Buy Bank Stakes Within Weeks, Officials Say (Robert Schmidt and Rebecca Christie)

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Oct. 9 (Bloomberg) -- The government is planning to buy stakes in a wide range of banks within weeks as the credit freeze increasingly threatens to tip the U.S. economy into a deep recession.

Treasury Secretary Henry Paulson and top aides are still considering options on how the purchases would work, including having the government obtain preferred stock, two officials informed of the matter said.

The plans would be a shift in emphasis in Paulson's original plans for the $700 billion bailout package passed by Congress last week. While the Treasury still intends to buy troubled mortgage-backed securities from financial institutions, a direct capital injection would offer more immediate relief.

``The Treasury is no longer looking for one silver bullet,'' said Steve Bartlett, president of the Financial Services Roundtable, which represents 100 of the biggest firms in the industry. ``They have to proceed on all fronts.''