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And Federal Deposit Insurance Corp. head Sheila Bair said the bank backstop agency was taking two steps to bolster confidence in the banking system.

The FDIC will guarantee new senior unsecured debt issued by the banks it insures through June 30, 2009. The agency will also now fully insure non-interest-bearing deposit transaction accounts, which officials said amounted to new protection for businesses that use such accounts for payroll and other routine financial transactions.

Treasury officials declined to identify other banks and financial firms that may participate in the program through the end of the year. But House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, said in an interview on MSNBC that government officials have promised to include smaller regional and community banks in future deals.

Treasury Department officials briefing on the program denied they were playing catch-up.

But Mrs. Bair said the United States acted in part to match actions in Europe and Japan.

“Their guarantees of bank debt and increases in deposit insurance would put U.S. banks on an uneven playing field unless we acted as did today,” she said.

Mr. Paulson’s original script - which called for the U.S. government to use the bailout money just to buy up the toxic mortgages and mortgage-backed securities at the heart of the credit crisis - also was widely panned by economists and market strategists.

“The European actions clearly affected the Treasury timetable,” said Bert Ely, a banking consultant in Alexandria. “There was a growing feeling that [Mr. Paulson’s approach] was not going to do the trick and was not coming on line fast enough.”

Newly awarded Nobel economics laureate Paul Krugman and other leading economists said Mr. Paulson’s asset-purchase program - which the Treasury is still pursuing - did not directly attack the basic problem: getting money into the banking system to jump-start lending.

“Virtually every economist who looked at the original Treasury plan said it was the wrong way to go,” said Loyola University finance professor George G. Kaufman, co-chairman of the Shadow Financial Regulatory Committee.

“All of us were disappointed that it took Paulson and the administration so long to recognize the obvious,” he said.

Lawmakers of both parties had pressed the reluctant Treasury secretary to consider the recapitalization idea while the $700 billion Wall Street rescue bill was working its way through Congress. Mr. Paulson eventually agreed to accept the plan as an option, although his focus remained clearly on the purchase of bad assets.

He repeatedly slammed the idea of direct capital infusion into troubled banks when he testified on Capitol Hill on the bailout bill.

“There were some that said we should just go and stick capital in the banks, put preferred stock in them,” he told a Senate Banking, Housing and Urban Affairs Committee hearing. “… But we said, the right way to do this is not going around and using guarantees or injecting capital, but to use market mechanisms.”

Tuesday, in the Cash Room, Mr. Paulson said, “Today I am announcing that the Treasury will purchase equity stakes in a wide array of banks and thrifts.”