United States will provide up to one billion dollars for the purchase of toxic assets and another trillion dollars to buy credits to revive consumption
| Date: February 10, 2009 | Source: Europa Press |
| Category: Economy | |
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The U.S. Treasury Secretary Timothy Geithner announced today that the new bailout plan the administration of Barack Obama could reach two trillion dollars, because although initially allocated 500,000 million dollars to buy toxic assets banks could extend the program to one billion dollars, while another trillion dollars will be used to extend a temporary program of the Federal Reserve to purchase credits to boost consumption.
In a long-awaited public appearance in Washington, Geithner said the Treasury will create a fund of public and private investment to eliminate the toxic assets of major Wall Street banks that were the origin of the crisis, and that the new Financial Stability Plan will be driven by the Fed and the Federal Deposit Insurance Corporation (FDIC), among others.
He also announced that another pillar of the plan will help citizens to stem the tide of foreclosures and the sharp fall in the price of housing to be allocated for 50,000 million dollars and "all necessary resources" to reduce the cost of mortgages and interest rates.
As already glimpsed left last night President Obama in his first press conference since taking office, Geithner said today that his department's efforts will focus on strengthening the balance sheets of banks to be "cleaner and stronger" , a process that must involve the banking institutions themselves through a "comprehensive review" of their accounts.
Treasury Secretary felt that the efforts of the current financial sector are "insufficient" and even to think what he is doing is going "against recovery," so we opted to change that dynamic but urged patience until they begin to measurement results be announced.
CAPITAL INJECTIONS "WITH CONDITIONS"
But the head of U.S. economic policy warned that from now there will be new capital injections to banks in need, but will "with conditions" after the criticism aroused among the citizens the use given to their taxes during the first part of the rescue plan approved by the Bush administration.
Former Federal Reserve Chairman New York said that while the bailout approved last fall was "absolutely essential" to avoid a "catastrophe", said that it was "improperly", leading to distrust of taxpayers who saw the Government offering huge amounts of money to institutions that caused the crisis and without transparency.
To get people back to trust institutions the Treasury bet for greater transparency, among other things announced the creation of a website where taxpayers can see how they are impacting the measures in the flow of credit and how it spend every dollar of your taxes.
According to Geithner, the financial system is a central part which transforms the income and savings of American workers in loans to finance everything from buying a first home, to a new car or college education. "Without credit, economies can not grow and now some critical points of our financial system is seriously damaged," he said.
Treasury Secretary recalled that since the crisis began a year ago have lost 3.6 million jobs, 600,000 of them in the past month, while still falling housing prices and access to credit is frozen , so that the government's plan is to act on two fronts, job creation and credit flowing again.
Finally, he stressed that the success of the Financial Stability Plan will require a high level of commitment and financial cooperation unprecedented in both the U.S. and the rest of the world, and it will take "a sustained commitment of public resources be used with the utmost care. "
PROMOTE THE CONSUMPTION
While Geithner spoke the Federal Reserve Board showed its willingness to extend the current temporary program to purchase asset-backed securities (TALF) to a trillion dollars, made possible through the provision of additional funding from relief plan troubled assets (TARP) by the Treasury.
The U.S. central bank, which after cutting interest rates to a level close to 0% said they would adopt various ways to help revive the economy and credit under what he called 'credit relief' is also noted that willing to extend the range of acceptable collateral by the entity in the purchase of securitization operations.
"The goal of the board is that this expansion of TALF provide additional assistance to financial markets and institutions to enable them to meet the credit needs of households and businesses and support economic growth," said the Fed
