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The government has cleared the way to ship out
$125 billion this week to the country's largest banks, beginning
the biggest government bailout in history.
      

"The money will go out the door for those institutions early
this week," predicts Assistant Treasury Secretary David Nason, one
of the chief architects of the rescue plan.
      

Not only is the money ready to be sent to nine major financial
institutions, including Bank of America, Citigroup Inc. and
JPMorgan Chase, but the government is reaching preliminary
agreements with a group of more than a dozen major regional banks,
who will share a part of an additional $125 billion the government
hopes to pump into the banking system.
      

Before the end of the year, Treasury Secretary Henry Paulson
intends to have spent $250 billion of the $700 billion bailout
package buying ownership stakes in U.S. banks. The goal is to
improve their balance sheets so that they will resume more normal
lending practices and prevent the country from sliding into a deep
recession.
      

Another $100 billion is earmarked to be spent buying troubled
assets from banks such as bad mortgage loans as another way to spur
banks to resume lending.
      

However, a long line of other industries are hoping the
government will decide to help them as well. Insurance companies,
automakers, hedge funds and foreign-owned banks are all making
appeals to be included in the rescue package, contending that they
need assistance as well.
      

Treasury and White House officials signaled on Monday that their
cases are being reviewed. That review is coming in the closing days
of a heated election campaign when the country will be electing a
new president and a new Congress for next year.
      

The beleaguered auto industry is making its appeals to both
presidential candidates and lawmakers running for re-election and
their are indications those pleas are being heard.
      

Presidential press secretary Dana Perino told reporters Monday
that officials at the "highest levels" of the Treasury, Energy
and Commerce departments have listened to automakers make their
cases. She said the administration is "working as quickly as we
possibly can" to finalize the rules needed for automakers to start
tapping a $25 billion loan fund that Congress approved last month.
      

The fund is designed to help automakers develop new
energy-efficient technology but is seen as a way to help keep the
companies afloat during hard times. The expectation is that an
initial $5 billion could be freed up soon.
      

Perino said Treasury was also trying to determine whether the
financing arms of the automakers might be eligible for federal help
under the bank stock-purchasing program of the rescue package.
      

The rescue program is just one of the efforts the government is
making to combat the worst financial crisis to hit the country
since the 1930s. The Federal Reserve began a program Monday to
purchase the short-term debt of businesses, known as commercial
paper. This market has been frozen since the collapse of Lehman
Brothers spooked credit markets last month.
      

Fed officials were also scheduled to begin a two-day meeting on
interest rates on Tuesday with economists widely forecasting that
the Fed will cut a key interest, the federal funds rate, to 1
percent in an effort to boost borrowing demand as a way to deal
with the economy's current troubles.
      

So far, the efforts to battle the severe credit squeeze have
shown little in the way of results. Libor, the London Interbank
Offered Rate, a key goalpost for international lending, edged down
only marginally on Monday and still remains at elevated levels.
      

"All these efforts are doing some good, but the question is
whether they will do enough," said David Wyss, chief economist for
Standard & Poor's in New York. "The credit markets are still
pretty locked up."
      

Stocks tumbled again on Wall Street Monday. The Dow Jones
industrials finished the day down 203 points, or 2.4 percent,
closing at 8,176, the lowest close of the year. Remarkably, it was
the 28th time in the 31 trading sessions since the financial
meltdown began in mid-September that the Dow has moved triple
digits for the day.
      

Major Asian stock markets rebounded Tuesday after several days
of steep declines. Japan's benchmark Nikkei 225 index jumped 6.4
percent, Hong Kong's Hang Seng index surged more than 13 percent
and South Korea's Kospi jumped 5.6 percent.
      

Treasury announced that Paulson, who is the administration's
point person on the bailout effort, will not make a scheduled
speech to Wall Street executives on Tuesday, sending an aide in his
place, so that he could remain in Washington to work on the details
of the rescue program.
      

That program has undergone a major change in emphasis since it
was passed by Congress. After global markets imploded, forcing
other countries to rush to the aid of their banks, Paulson decided
that it was urgent to get assistance to U.S. banks more quickly. As
a result, he earmarked $250 billion for the stock purchase plan and
only $100 billion for what had originally been the centerpiece of
the proposal, the purchase of troubled bank assets.
      

Treasury has given the go-ahead for stronger banks to use the
money it receives in the rescue program to acquire troubled banks.
That has prompted criticism the government could be getting into
the position of picking winners and losers.
      

Karen Thomas, the executive vice president for the Independent
Community Bankers of America, which represents the country's 8,000
smaller banks, said her group supported efforts to consolidate
troubled banks with stronger ones but did not believe it was proper
to pick winners among healthy banks.
      

"We believe that government money should not be used to
facilitate consolidation of healthy institutions," she said.
      
      

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The government has cleared the way to ship out
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