Wall Street rescue to include Treasury stakes in healthy banks, Neel Kashkari says
The overseer of the bailout says programs have been set up to implement the plan, but he doesn't give a start time for the purchase of troubled assets.
WASHINGTON -- The Treasury official overseeing the $700-billion rescue operation for troubled banks said today the government will buy stakes in healthy banks as well as those that are struggling.
"We are designing a standardized program to purchase equity in a broad array of financial institutions," Neel Kashkari, who heads the department's Troubled Asset Relief Program, said in a speech in Washington. "The equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions."
Kashkari said the administration has set up several programs needed to put the bailout plan into action, but did not say when they will start buying troubled assets or how much they will spend.
The comments came as markets rose sharply on news of coordinated moves by European and U.S. officials to pump money into the paralyzed banking system, including the Treasury decision to take an ownership stake in U.S. banks.
President Bush, after a White House meeting with Italian Prime Minister Silvio Berlusconi, said that "people all over the world are understandably concerned about the global financial crisis and how it will affect their families and businesses."
Calling for a meeting of the G-8 leaders "in the next few weeks," Bush said the United States will continue trying to unfreeze the credit crunch and restore confidence.
"These are tough times for our economies, yet we can be confident that we can work our way through these challenges," said Bush, adding that the United States "will continue to work closely with the other nations, to coordinate our response to this global financial crisis."
In the administration's first detailed outline of how the rescue plan will work, Kashkari said Treasury officials were "working around the clock" to restore confidence in the crippled financial system.
"Treasury is implementing its new authorities with one simple goal -- to restore capital flows to the consumers and businesses that form the core of our economy," he said in remarks to the Institute of International Bankers.
He provided no details on the Treasury plan to buy a stake in U.S. banks, but said the department had appointed the firm of Simpson Thatcher & Bartlett to structure the stock purchases.
