Momentum growing for direct capital injections into banks

The US plans to inject capital into banks in exchange for common and preferred stock, Reuters reports. The injections were authorized in last week’s TARP bill and could begin by the end of October (if there still are banks at the end of October). The Treasury investments would be passive with no board representation and would be voluntary. Sounds sort of like a US sovereign wealth fund, just without the wealth…

Stocks have turned positive on the news and EUR/JPY has rebounded after a morning pullback.

UPDATE: The White House confirms Paulson is “actively considering” direct capital injections.