Oct. 20 (Bloomberg) -- Treasury Secretary Henry Paulson said the government has set aside enough money to buy stakes in every financial company that qualifies for the crisis program aimed at halting the credit freeze.

``Sufficient capital has been allocated so that all qualifying banks can participate,'' Paulson said in Washington, announcing details on how banks can sign up for the funds. ``This program is designed to attract broad participation by healthy institutions and to do so in a way that attracts private capital to them as well.''

Today's announcement follows complaints from the banking industry that the rescue effort Paulson unveiled a week ago was short on specifics. Financial institutions such as PNC Financial Services Group Inc. and BB&T Corp. are considering signing up, and regulators today released details about how to do so.

After an initial $125 billion was allocated to nine of the largest banks, including Citigroup Inc. and Morgan Stanley, the Treasury plans to inject another $125 billion into other lenders.

Under the program, banks can sell shares in an amount equivalent to 1 percent to 3 percent of their risk-weighted assets, up to $25 billion, bank regulators said in a separate statement today. The deadline for application is Nov. 14.

Paulson said investments will be announced within 48 hours of approval. The Treasury won't make information public when requests are either rejected or withdrawn, he said.

Types of Banks

A government official who briefed reporters after Paulson's statement said the effort would be aimed first at publicly traded banks with accommodations to allow for other deposit- taking institutions to participate. The regulator also said pending mergers could help an institution qualify for capital.

The Treasury will make allowances for firms that express interest and need extra time, beyond the Nov. 14 deadline, the official said. He also said participation in the program will be separate from regulator decisions about whether to let a troubled bank fail.

The capital injection program won't be available to foreign-owned banks or to non-bank financial firms such as insurance companies and hedge funds, the bank regulators said in a fact sheet. Companies that don't qualify for the equity purchases can still take part in other elements of the Treasury's Troubled Asset Relief Program, the regulators said.

The Treasury's newly created Office of Financial Stability will decide which companies get the cash infusions, with ``considerable weight'' given to the recommendations of bank regulators, Paulson said. Among the federal supervisory agencies are the Federal Reserve and Federal Deposit Insurance Corp.

`Not an Expenditure'

The Treasury is investing in what Paulson calls ``healthy'' companies with the hope they use the money to lend to businesses and consumers, unfreezing the credit markets. Evidence that the U.S. may be in a recession increased last week, as confidence among Americans fell by the most on record and single-family housing starts hit a 26-year low.

In his remarks today, Paulson stressed that the government wasn't likely to lose money on the bank stakes. ``This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything,'' he said.

Fed Chairman Ben S. Bernanke, testifying before Congress earlier today, said the equity-purchase program and other help for troubled banks ``should help rebuild confidence in the financial system.''

Without the rescue-plan approved by Congress earlier this month, the U.S. would have been ``on the brink of a very serious banking crisis,'' he added.

One-Page Form

Paulson laid out a process for banks to apply for the capital through their own regulator. A single application form will be posted on the Web sites of the Fed, the Office of Thrift Supervision, the FDIC and the Office of the Comptroller of the Currency by the end of today, Paulson said.

``Let me be clear that this program is not being implemented on a first-come-first-served basis,'' Paulson said.

PNC Chief Executive James Rohr said in a conference call last week the government plan was ``an opportunity to raise relatively inexpensive capital'' and is ``very seriously'' considering participation.

``We're still taking a look at it,'' PNC spokesman Brian Goerke said in an interview.

Marshall & Ilsley Corp., Wisconsin's largest bank, said in a letter to shareholders Oct. 17 that ``accelerating deterioration'' in the economy prompted the bank to consider participation in the plan.

`Real Progress'

BB&T CEO John Allison said on a conference call last week that lenders are feeling pressure to participate from regulators, and that ``you have to keep regulators happy.''

Wayne Abernathy, an executive vice president at the American Bankers Association in Washington, said the Treasury is making ``real progress'' in addressing smaller banks' technical concerns about the program. Still, some problems remain on issues such as how to handle investments in privately held firms, he said.

``Frankly, until more of these details are worked out, not many banks are going to be sending the forms in,'' said Abernathy, whose group represents lenders of all sizes.

To contact the reporters on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net.

Last Updated: October 20, 2008 16:28 EDT