WASHINGTON — The Bush administration took its first steps Monday to implement the $700-billion bailout for the financial system, tapping a Treasury Department official to lead efforts to buy securities tied to troubled loans and soliciting applications from financial institutions to manage the portfolios.
The rescue plan approved by a divided Congress on Friday gives Treasury Secretary Henry M. Paulson 45 days to put a plan in place, but it may not take that long. Treasury officials gave firms seeking to manage portfolios a deadline of Wednesday to submit applications, and initial selections will be made next week.
But although the plan may move ahead of schedule, the results may not be immediate, President Bush cautioned.
"We don't want to rush into this situation and not have the program be effective. It's going to take a while to restore confidence in the financial system," Bush said after meeting with small-business owners at a San Antonio pharmacy. "But one thing people can be certain of is that the bill I signed is a big step toward solving this problem."
The first major step the administration took toward activating the broad powers in the Emergency Economic Stabilization Act was naming Neel Kashkari to run the program. Kashkari is a former colleague of Paulson at the Wall Street firm Goldman Sachs Group Inc., where Paulson served as chairman.
Kashkari, the assistant Treasury secretary for international economics and development, arrived at the department with Paulson in July 2006 as a senior advisor. Kashkari had been a vice president at Goldman's office in San Francisco.
Kashkari will be the temporary head of the Office of Financial Stability. The next president is expected to make a permanent appointment, which must be confirmed by the Senate.
The announcement was important to show Wall Street that the asset purchases may begin soon, said Henning Bohn, an economics professor at UC Santa Barbara.
"Right now, there are a lot of anxieties around, so making a move that says, 'We're on it' is helpful," he said. "You may question that there's another Goldman guy going in there, but that's what we have now."
The President's Working Group on Financial Markets -- a panel set up by Bush in 2007 that includes Paulson and Federal Reserve Chairman Ben S. Bernanke -- promised Monday to move rapidly to begin the asset purchases. The group also promised to administer the program "in a transparent and methodical fashion."
