by Calculated Risk on 10/13/2008 05:36:00 PM

UPDATE: The WSJ article has been updated:

The U.S. government is set to buy preferred equity stakes in nine top financial institutions ... Not all of the banks involved are happy with the move but agreed under pressure from the government.

From the WSJ: Treasury to Roll Out New Approach to Credit Crisis

The Bush administration is expected Tuesday to roll out a wide-ranging effort to restore confidence to the battered banking system, following similar moves by European governments ...

The initiatives will likely supersede many of the government's previous efforts. They are being formulated jointly by the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp...

[T]he Treasury [is expected] to take approximately $250 billion in equity stakes in potentially thousands of banks ...

[T]he FDIC is expected to temporarily extend its backstop from bank deposits to new senior preferred debt issued by banks and thrifts for three years. ...

Other moves could include temporary loan guarantees aimed at helping banks borrow the money they need to do business. ...

The current planning would bring the U.S. in to line with [Europe].

The title of the post is from this piece by Professor Krugman: Moment of Truth