WORLD> America
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WORLD> America
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US backs away from plan to buy bad assets
(Agencies)
Updated: 2008-11-13 07:39 While he said the industry was a "critical" one for the United States, he said the purpose of the program was to provide financial system stability. He said one option would be to amend legislation to allow $25 billion already approved for efficient vehicle production to be made available more quickly. So far, the Treasury has focused on providing capital to federally regulated banks and thrifts, but Paulson said it was looking to broaden the effort to cover financial institutions that do not have a federal bank or thrift charter. "Although the financial system has stabilized, both banks and non-banks may well need more capital given their troubled asset holdings, projections for continued high rates of foreclosures and stagnant US and world economic conditions," he said. $700 Billion Still Enough? The Treasury has allocated $250 billion of the bailout funds to direct capital injections into banks and thrifts and it has earmarked another $40 billion to shore up AIG, leaving just $60 billion to dole out before it would have to ask Congress to release the final $350 billion. Paulson said he had no timeline for that request, which means the decision could be left to the incoming administration of President-elect Barack Obama, who takes office on January 20. He also signaled he would not seek to increase the overall size of the bailout fund. "I still am comfortable that, with $700 billion, we have what we need," he said. With an aim to restoring credit for households, Paulson said the Treasury and Fed were considering setting up a program to increase liquidity for top-rated asset-backed securities, but he provided few details. "The initial shock of abandoning TARP is hitting stocks, but the support for consumer-level lending may be a silver lining as it goes to the root of what's ailing the economy, namely personal consumption," said Brian Dolan, chief currency strategist at FOREX.com in Bedminster, New Jersey. |
