Breakdown of Financial-Rescue Planby Tim Manni
After Treasury Secretary Geithner’s speech was postponed Monday to allow lawmakers additional time to focus on the stimulus package, Mr. Geithner is set to address America tomorrow — laying out the Obama Administration’s plan to rescue the financial industry. While many strategies are expected to remain unchanged, here’s a short breakdown of a couple important issues surrounding the second-half of the TARP funds:
Bad Assets: According to CNBC, the bad-bank strategy for dealing with financial institutions’ bad assets will not be included in the Treasury’s financial-rescue plan. Instead, Treasury officials are seeking a solution that utilizes private firms to purchase the bad assets.
Nationalization: Last week Bank of America CEO Ken Lewis called the possibility of BofA becoming nationalized “absurd.” Furthermore, if private firms do begin to purchase toxic assets on their own, it reduces the need for nationalization, since institutions are proving they are viable enough to attract private funds.
$350 Billion: In the face of an approximately $800 billion stimulus package, taxpayers can only hope the Treasury plans to respect the $350 billion limit appropriated for the second-half of the TARP funds. As of now, the Treasury has said they will not exceed $350 billion.
Foreclosure Assistance: The latest reports have calculated that the administration will dedicate between $50 billion and $100 billion to foreclosure assistance. Keep your eye out for a program that addresses the lack of success in loan-modification programs.
Treasury Secretary Geithner will make his address tomorrow morning at 11a.m., followed by a CNBC interview at noon. Over the next two days Geithner will testify in front of both the House and the Senate.