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Treasury dispensing aid cash

Nine big banks will be first in line to get $125 billion in rescue funds. Overseas less than impressed.

WASHINGTON — The Treasury Department will start doling out $125 billion to nine major banks this week to get credit flowing again, giving a lift to U.S. markets on rising confidence that the government’s moves would stave off a protracted recession.

Investors overseas were less assured, though. Stocks fell sharply around the globe.

Assistant Treasury Secretary David Nason said the deals with the nine banks were signed Sunday, and the government will make the stock purchases this week. The deals are designed to bolster the banks’ balance sheets so they will begin more normal lending.

The action will mark the first deployment of resources from the government’s $700 billion financial rescue package passed by Congress on Oct. 3.

The bailout package has undergone a major change in emphasis since it was passed by Congress. Treasury Secretary Henry Paulson decided to use $250 billion of the $700 billion to make direct purchases of bank stock, partially nationalizing the country’s banking system, as a way to get money into the financial system more quickly.

The plan is also aimed at clearing banks’ balance sheets of bad assets. That effort has yet to begin.

The deployment of the first $125 billion to the major banks had been delayed while the government and the banks worked out the details for the purchases. Nason, a key architect of the rescue plan, said Monday on CNBC that those agreements had been signed late Sunday night.

Treasury is also starting to give approval to major regional banks with the goal of getting another $125 billion in stock purchases made by the end of this year.

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