The Treasury's new plan to address the financial crisis was announced this morning by Secretary Timothy Geithner. Mr. Geithner's message continued to reflect the Administration's somber tone regarding the urgency of addressing the U.S. financial system's troubles with more government help to avoid a cataclysmic meltdown.
As quickly as "TARP" entered our vocabulary it is leaving. The program has been renamed the "Financial Stability Plan" and the Treasury has a new website, www.financialstability.gov.
There are three components to the overhauled program:
As part of the plan, Treasury and the Federal Reserve will create a program designed to incent investors to buy bad mortgage-related assets from banks. The Federal Reserve will use its balance sheet to finance the program, and it is expected that the FDIC may also provide guarantees.
The second part of the plan would build upon the $200 billion program announced by the Federal Reserve set up in November to jump start the credit market for commercial, student, auto and credit card loans by increasing funding to up to $1 trillion.
Lastly, the third program component involves a review of the capital levels of all banks, including future loss projections to assess funding needs and remaing TARP funds would be used for this purpose.
Treasury also plans to shortly introduce a separate initiative to address foreclosure and loan modifications.
Contact Allyn Dixon at 515.246.4520 with questions or at adixon@dickinsonlaw.com
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