WASHINGTON - US PRESIDENT Barack Obama's economic advisers have determined that they can shore up top US banks without asking Congress for more money by converting loans into stock, The New York Times reported on Monday.

Citing unnamed administration officials, the newspaper said the move would convert the US government into part owner of some key banks.

White House and Treasury Department officials now say they can stretch what is left of the US$700 billion (S$1.1 trillion) financial bailout fund further than they had expected a few months ago, the report said.

They believe this could be achieved simply by converting the government's existing loans to the nation's 19 biggest banks into common stock, the paper noted.

But converting those loans to common shares would turn the federal aid into available capital for a bank - and give the government a large ownership stake in return, The Times pointed out.

While the option appears to be a quick and easy way to avoid a confrontation with congressional leaders, some critics would consider it a back door to nationalisation since the government could become the largest shareholder in several banks, the report said.

According to The Times, the Treasury Department has already negotiated this kind of conversion with Citigroup and said it would consider doing the same with other banks. -- AFP