Soros urges government stake in financial sector

NEW YORK (Reuters) - Investor George Soros said on Wednesday the Treasury's original bailout plan would have done little to address the credit crisis, suggesting instead that the government acquire a direct equity stake in financial firms.

Such a move would help bolster private investment in the beleaguered sector, the head of Soros Fund Management told Reuters in an interview.

"The fact that the plan was rejected in Congress provides an opportunity to amend it to make it more effective," said Soros.

"The way to do it is to focus on recapitalizing the banks by injecting equity and actually encouraging existing shareholders to provide that equity."

(Reporting by Pedro Nicolaci da Costa and Jennifer Ablan)