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(Editor’s note: The following text is the original story filed by Washington Times staff writer David R. Sands.)

It was, by all accounts, a remarkable about-face.

Treasury Secretary Henry M. Paulson Jr., economic point man for a conservative Republican administration and former chairman of Wall Street investment powerhouse Goldman Sachs, faced the press in the department’s ornate, gilt-edged Cash Room Tuesday to spell out just how he planned to administer the most massive government intervention in the financial markets in the history of the republic.

“We regret having to take these actions,” a somber Mr. Paulson said.

“Government owning a stake in any private U.S. company is objectionable to most Americans, me included. Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable.”

President Bush, in a statement from the Rose Garden, tried to reassure Americans that “the government role will be limited and temporary.”

“Each of these new programs includes safeguards to protect taxpayers,” Mr. Bush said. “These measures are not intended to take over the free market, but to preserve it.”

Peer pressure - from foreign regulators, from anxious market traders and from a number of top economists - forced Mr. Paulson to reverse course. The Treasury secretary Tuesday embraced an idea he had long and steadfastly opposed: to use taxpayer money to recapitalize U.S. banks, guarantee interbank lending and thaw frozen credit markets.

In Europe and Asia, led by British Prime Minister Gordon Brown, governments over the weekend called essentially the same play, pumping billions into their struggling banks, boosting deposit insurance limits and standing behind interbank lending. The United States risked being the odd man out.

“Given that many countries were already moving to guarantee bank debt, this action was needed for competitive equity,” said Edward L. Yingling, president of the American Bankers Association.

The pressure only grew when global stock markets scored record gains Monday on news of the coordinated European action and on widespread hopes that the Bush administration was about to follow suit.

A senior Treasury official, briefing reporters afterward, said that the first $125 billion of the recapitalization program would be spent in “days or weeks” to buy senior preferred stock in the first nine banks that agreed to participate. The nine included Goldman Sachs Inc., Mr. Paulson’s old employer; Citigroup Inc.; Wells Fargo & Co.; JPMorgan Chase & Co.; Bank of America Corp.; Merrill Lynch & Co.; Morgan Stanley; State Street Corp.; and Bank of New York Mellon Corp.

The government could spend another $125 billion on similar share purchases by the end of the year.

The banks will give the government a sizable ownership stake and have agreed to new limits on executive pay. They also will give the Treasury warrants to purchase the banks’ common stock in the future, with the purchase price being the price of the stock at the time the bank enters the program.

The Federal Reserve said it will begin purchasing large amounts of corporate short-term debt - known as commercial paper - beginning Oct. 27. It had previously announced the program but had not revealed a start date.

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