The administration of US President Barack Obama will impose tighter conditions on banks receiving money under the US$700 billion financial rescue program, but for now is not expected to ask Congress for more money in its sweeping overhaul of the bailout, industry and congressional officials said on Friday.
The decision not to request more money would be a relief to lawmakers, given that the administration is unveiling its changes in the midst of a debate over an economic recovery package that’s expected to cost about US$800 billion.
The program Treasury Secretary Timothy Geithner is scheduled to unveil in a speech tomorrow could cost more than the US$350 billion still unspent in the Troubled Asset Relief Program (TARP). But officials said the administration would have room to overhaul how the program works before determining whether to seek more money from Congress.
“Some of the reforms can be paid for without a new appropriation,” one official familiar with the plan said.
The industry and congressional officials who spoke did so on condition of anonymity because the administration had not yet publicly released details of the program.
Key members of Congress had urged the administration not to request more money for the rescue program. Congress approved the US$700 billion program last fall, but since then, many lawmakers have complained that the Bush administration implemented a confused and ad hoc strategy.
“Until they are successful in showing the average American that the money is being used reasonably, there’s no point in asking for it, because they won’t get it,” House Financial Services Committee Chairman Barney Frank said last week.
The administration declined Friday to provide any specifics of what will be in Geithner’s new plan to address the worst financial crisis to hit the country in seven decades. But the Treasury Department said the revamped plan would offer a comprehensive way to stabilize the financial system, while strengthening accountability, oversight and transparency to protect taxpayer money.
Industry and congressional officials said they thought the administration would continue to stress government purchases of bank stock as a way to bolster banks’ balance sheets and to try to get them to resume more normal lending.
But these officials said they believed the administration would impose tougher terms on the banks receiving money than in the first round of spending.
One official said the new terms will include requirements that banks that accept the next round of money work to get bad assets off their books.
The industry and congressional sources said they believed the new plan would also make broader use of government guarantees of bad assets that banks are carrying on their books. Those bad assets are helping to stifle lending.
The Bush administration used government guarantees in November when it agreed to limit Citigroup’s losses on a portfolio of US$301 billion in troubled assets.
It used the same approach last month, when it agreed to provide increased support to Bank of America by covering US$118 billion of that bank’s troubled assets.
The administration’s new plan is likely to include at least a limited effort to buy banks’ bad assets. One possibility is to use a new lending facility the Federal Reserve is developing called the Term Asset-Backed Securities Loan Facility, these officials said.
The Fed on Friday announced new terms and conditions for this program and said a date for it to begin would be announced later this month.
But the program to buy bad assets is expected to be much smaller than the so-called “bad bank” the administration had considered creating to take some toxic assets off banks’ books.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)