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Bush: 'Extraordinary and historic investment' in U.S. banks

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Bush announces new step to steady banking industry

WASHINGTON (AP) - President Bush has announced a $250 billion plan by the government to directly buy shares in the nation's leading banks. He says the moves are "not intended to take over the free market but to preserve it."

Bush says the federal government will use part of the $700 billion bailout law to inject money into banks "by purchasing equity shares." He says the Federal Deposit Insurance Corporation will "temporarily guarantee" most new debt issued by insured banks.

The FDIC also will expand government insurance to cover all non-interest bearing accounts, aiding small businesses in covering their day to day operations. And the president says the Federal Reserve will "soon finalize work" on a new program to serve as a buyer of last resort for commercial paper.

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Read more on CNNMoney.com: U.S. pulls the trigger.