Treasury Secretary Tim Geithner defended his financial stabilization plan Tuesday, telling senators it is “fundamentally different” than the one pursued by his predecessor, Henry Paulson. (sounds like the same thing to me)
Testifying before the Senate Banking Committee, Geithner conceded that the plan he outlined Tuesday morning lacked some details, including how much it might cost and how much additional funding might be necessary beyond what’s available under previous congressional authorizations.
Treasury Secretary Timothy Geithner pledged government financing for as much as $2 trillion of efforts to spur new lending and address banks’ toxic assets, seeking to end the credit crunch hobbling the economy.
The main components of the Treasury’s package today are a joint public- and private-sector fund to buy as much as $1 trillion of illiquid assets and a $1 trillion program to supply new credit to consumers and businesses. The administration also will inject additional taxpayer funds into banks, imposing tighter restrictions that will include limits on dividend payments, acquisitions and executive pay.
“I want to be candid: this strategy will cost money, involve risk, and take time,” Geithner said today.
Under today’s plan, regulators will subject banks to new tests to determine whether they have enough capital. The Treasury, Fed and other supervisors in the President’s Working Group on financial markets will develop guidelines for the examinations, which are aimed at ensuring that the country’s largest banks can withstand a worsening economy.
Banks that don’t have sufficient capital will be given additional taxpayer funds in the form of convertible preferred securities. Participants will have their dividends and political lobbying efforts restricted, along with limits on stock buybacks, acquisitions, executive compensation and so-called golden parachutes. Luxury spending provisions must also be disclosed.
Today’s package includes $50 billion for measures to stem mortgage foreclosures. Banks receiving federal funds will be required to participate in efforts to mitigate foreclosures. The Treasury and Fed will work to reduce monthly payments and establish loan-modification guidelines.
Still sounds like the same plan with a bit of tweeking to appear more sympathetic to the middle class. Just once I would like to hear a plan coming out of Wall Street…..so far they have not said anything to address the problem they created. A thank you would be a good start.