Analysts are applauding the latest efforts from central banks and finance ministers to shore up their troubled financial institutions.

The U.S. government announced Tuesday that it will inject US$250 billion into banks by buying their preferred shares. It will also guarantee the deposits and senior debt of institutions backed by the FDIC. These moves follow similar announcements form European policymakers over the weekend, and have analysts optimistic that the financial crisis may finally ease.

The rating agency Moody’s Investors Service said that the actions announced today by the US Treasury, Federal Reserve, and FDIC “directly address the key risks that rated banks in the U.S. banking system face — namely real, or perceived, capital deficiencies resulting from deterioration in asset quality and the attendant loss of investor confidence that has affected liquidity and funding.”

Research firm Global Insight Inc. said that the actions by the U.S. Treasury and Fed represent “a massive infusion of critical new capital into the U.S. banking system.”

“Banks faced increasingly difficult conditions for re-capitalization in the third quarter, leading to downward pressure on their risk capital ratios, a severe tightening of credit conditions, a sharp deceleration of credit growth to below critical thresholds, and associated negative feedback loops to the economy and the level of overall equity prices. The new capital infusion represents an effective short-term tool for dealing with the crisis in the financial system, and was taken in conjunction with a broad array of emergency action recently announced by European Union governments to stabilize European financial institutions on Monday, October 13,” it said.

Moody’s said that the actions taken by the government are “very positive steps in helping to restore confidence in the U.S. banking system”. It believes that these actions will support greater stability for ratings of U.S. banks, although it does not expect widespread upgrades of bank ratings to result from the programs.

“These programs are clear and decisive in their ability to be executed quickly and to alleviate intermediate-term liquidity and capital adequacy concerns. However, Moody’s does not expect that these programs will provide a full resolution of the challenges facing the U.S. banking sector. Poor operating results are expected at least through the balance of 2008 and well into 2009, with contraction of credit flows, both in response to recessionary condition and to improve bank balance sheet quality, affecting revenue and pre-provision profitability. Further, problem assets will take time to work through the system and will provide a drag on bottom-line earnings for some time to come,” it explained.

Moreover, Global Insight also predicts that by using US$250 billion of the US$700 billion TARP facility for recapitalizations, it is likely that the Treasury will have to go back to Congress for more money. “With European governments stepping up to the plate and making close to US$2.5 trillion available to combat severe pressure on European financial institutions, requests for additional fiscal resources in the United States to combat the crisis would appear to be inevitable, either when Congress reconvenes after the elections, or early in 2009,” it says.