President Obama is considering another massive injection of cash into America’s stricken banking system, a move that will be deeply unpopular with the public but is being forced upon him by the speed at which the US economy is unravelling.
With the collapse on Saturday of the third US bank this month — the First Centennial Bank of California — Mr Obama is under pressure to spend hundreds of billions more to rescue the financial system. It would come on top of last year’s $700 billion (£515 billion) Wall Street rescue package that was opposed by most Americans. They viewed the plan as a bailout of the bankers that they blame for the financial crisis.
Any additional move to ease the crisis afflicting America’s banks will be separate from Mr Obama’s $825 billion economic stimulus package that senior aides spent the weekend trying to sell to a growing number of Republican sceptics and the US public.
The huge stimulus package, aimed at creating jobs and re-starting the economy, is expected to pass Congress because Mr Obama enjoys majorities in the House and Senate. His hopes of winning bipartisan approval for the plan have foundered in recent days because of growing Republican misgivings about the size of the Bill and whether it will work.
Mark Zandi of Moodys.com, an economist who spoke to Senate Democrats on Thursday, said that conditions in the US banking system were “eroding far more rapidly than anyone anticipated”
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