February 26, 2009

Treasury prices fell Wednesday as the government eased some of investors' worries about the troubled banking sector.The Treasury Department confirmed it would be buying preferred shares of banks that can be converted into common stock. It also said it will use two economic scenarios to measure banks' health - a "stress test" that's expected to be completed by the end of April.

Federal Reserve Chairman Ben Bernanke, meanwhile, reasserted that the government does not plan to nationalize banks. At a House Financial Services Committee hearing Wednesday, Bernanke said nationalization "is when the government seizes the bank and zeros out the shareholders and begins to manage and run the bank. And, we don't plan anything like that."