Slim: US should buy stakes in failing institutions

A US$700 billion bailout plan, currently stalled in Congress, would allow the government to purchase bad mortgages and other delinquent assets held by troubled investment banks. U.S. lawmakers were scrambling Tuesday to revise the plan after it was voted down on Monday, sending stocks plunging.

But Slim said buying those debts would be complicated, because the government would then have to manage and resell them. He said it would be better for the government to assume majority ownership of the institutions, giving them more capital for restructuring and recovery.

Slim, one of the world's richest men, also suggested ailing banks take responsibility for their losses and seek private investment from individuals or sovereign wealth funds.

He cited Warren Buffett's US$5 billion investment in Goldman Sachs Group Inc. as an example. Buffett's company Berkshire Hathaway Inc. announced the investment last week, and Goldman said it was raising another US$5 billion through a common stock offering.

"I think the deal he made was very good, right on target," Slim told foreign reporters at a luncheon in Mexico City. "This is what banks need to do. This is the path for the financial rescue."

Slim avoided saying, however, whether his industrial-retail conglomerate Grupo Carso would make similar investments. The Mexican mogul's vast holdings include Telefonos de Mexico SA, which operates more than 90 percent of the nation's fixed-line phone services.

U.S.-traded shares of Telmex fell 3.9 percent on the New York Stock Exchange on Monday, when the Dow Jones industrial average plunged nearly 7 percent. Telmex shares rose 1.9 percent Tuesday to US$25.75.

Slim expressed optimism that Latin America would be able to weather the financial meltdown, saying many countries have achieved fiscal surpluses after years of economic reform.

If the region aggressively promotes job growth and controls inflation, the crisis "not only will not affect us, but we will be able to have more employment and moderate growth," he said.