In Geithner’s Overhaul, Aggressive Use of All Available Tools Expected
The nation’s top economic policymakers were putting the finishing touches yesterday on a financial rescue plan that will deploy hundreds of billions of dollars to spur the flow of credit to consumers and businesses.
The Obama administration aims to ease the financial crisis through a series of steps — including a program to insure banks against extreme losses on mortgages and other loans, a new round of investments in banks, help for homeowners at risk of foreclosure and the broadening of a Federal Reserve program to prop up lending. It could also purchase toxic assets from banks, possibly with financing from the private sector.
The plan amounts to an overhaul of the financial rescue undertaken by the Bush administration. It was scheduled to be announced Monday, though yesterday the administration was considering delaying it until Tuesday to maintain focus on the stimulus. No decision had been made, a source said.
The approach reflects Treasury Secretary Timothy F. Geithner’s philosophy of how governments should respond to financial crises. He favors aggressive use of all available tools, both to deal directly with the massive losses in the financial sector and to bolster confidence in the future. Too little government response during a severe crisis poses a greater risk than too much response, he said at his confirmation hearing.
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