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US reviewing UK interbank guarantee idea

WASHINGTON - The United States is reviewing a British proposal to guarantee interbank lending, a Treasury Department spokeswoman said on Friday.

Treasury spokeswoman Brookly McLaughlin said the White House has already commented on a plan from British Prime Minister Gordon Brown calling for concerted action among major industrial powers to guarantee interbank lending.

"We received the proposal from the Brits and we are reviewing it," she told reporters.

McLaughlin also said a $700 billion financial rescue bill approved by Congress last week gives the Treasury the authority to inject public capital into financial institutions if it determines that is appropriate.

"Secretary (Henry) Paulson said in his statement on Wednesday that we have the authority to do that in the bill, to make those kinds of purchases. And of course, we're going to be ... reviewing all the authorities we have in that bill."

McLaughlin said there would be likely be discussions among major powers meeting this weekend in Washington about actions to restore financial market stability.

However, she declined to comment on whether the Group of Seven nations was likely to announce a concerted plan in the next few days to shore up the financial system.

"I think clearly we're going to be working together and we're going to continue to coordinate on all these issues," McLaughlin said.