The U.S. Treasury will take stakes in several regional banks to bolster business and consumer credit, according to Bloomberg News.
Treasury could announce the plan as soon as today. The money would come from the second round of a planned $250 billion injection of capital into the financial system.
Regional banks themselves said earlier in the week that they would apply for direct investments from the government under the larger bailout plan.
The cash would backstop local banks struggling as foreclosures mount and loan losses pile up.
Meanwhile, Democratic Sen. Chuck Schumer says he's worried that banks are hoarding bailout money instead of lending it out.
"The purpose of the capital injections plan was to get money out to Main Street. If the banks are hoarding that money, it won't have that effect," Schumer told Newsday.
The senator told the Treasury in a letter to set lending goals for banks and to set guidelines for a systematic loan modification program designed to cut the number of foreclosures.
Paulson said similar things this week, but no hard-and-fast plan is in place.
Foreclosure activity in September rose 21 percent from a year earlier but fell by double-digits from the prior month as some state laws slowed the foreclosure process, according to RealtyTrac.
That means one in every 475 U.S. households received a foreclosure filing in September, the firm said in its report released on Thursday.
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