The US Treasury was to detail yesterday its plan to purge banks of toxic assets with the help of private investors, a key part of Washington’s drive to pull the world’s biggest economy out of a severe recession.
The scheme to rid banks’ balance sheets of up to US$1 trillion of bad loans and securities that thwart lending is central to US President Barack Obama’s effort to revive the economy with stimulus spending, a financial sector clean-up and regulatory reform.
Treasury Secretary Timothy Geithner said in an interview with the Wall Street Journal that private sector participation was essential to the scheme’s success: “We don’t want the government to assume all the risk. We want the private sector to work with us.”
The plan includes incentives in the form of abundant loans and generous terms to entice private investors to buy the unwanted assets, a source familiar with the matter said.
The news sent US stock futures and Asian share markets higher yesterday. Currencies that were sold off heavily during bouts of market volatility, such as the Australian dollar, also rose.
The US Treasury’s plan comes at a crunch time for Obama, who prepares to meet fellow G20 leaders at a financial summit in London on April 2 and struggles to contain public anger over big bonuses paid by insurer American International Group (AIG) that has been bailed out with US$180 billion in taxpayer money.
The new White House team is also trying to win support for big-ticket items in Obama’s record US$3.5 trillion budget proposal for the 2010 fiscal year — something in very short supply among Republicans in Congress.
Obama’s team was “incredibly confident” the economy will start growing again this year, Christina Romer, head of the White House Council of Economic Advisers, said on Sunday.
Obama offered a word of caution, warning the US financial system still faced risks requiring government intervention to avoid a more destructive recession.
“There are certain institutions that are so big that if they fail, they bring a lot of other financial institutions down with them,” Obama said in an interview with the CBS program 60 Minutes aired on Sunday. “And if all those financial institutions fail at the same time, then you could see an even more destructive recession and potentially depression.”
In a wide-ranging interview, Obama also acknowledged surprise at how quickly the US economy crumbled between his November election and January inauguration.
“I don’t think that we anticipated how steep the decline would be,” he said. “That slope is a lot steeper than anything that we’ve said — we’ve seen before.”
Obama issued his standard and optimistic long-term prognosis for the economy, but responded, “Yes,” when asked if “the financial system could still implode if you had a big failure at AIG or at Citicorp?”
He said that he felt caught in a balancing act, trying to assuage taxpayer anger at Wall Street with the need for support from the financial sector for his attempts to stop the country from plunging into fiscal turmoil.
People can preregister to receive their NT$10,000 (US$325) cash distributed from the central government on Nov. 5 after President William Lai (賴清德) yesterday signed the Special Budget for Strengthening Economic, Social and National Security Resilience, the Executive Yuan told a news conference last night. The special budget, passed by the Legislative Yuan on Friday last week with a cash handout budget of NT$236 billion, was officially submitted to the Executive Yuan and the Presidential Office yesterday afternoon. People can register through the official Web site at https://10000.gov.tw to have the funds deposited into their bank accounts, withdraw the funds at automated teller
PEACE AND STABILITY: Maintaining the cross-strait ‘status quo’ has long been the government’s position, the Ministry of Foreign Affairs said Taiwan is committed to maintaining the cross-strait “status quo” and seeks no escalation of tensions, the Ministry of Foreign Affairs (MOFA) said yesterday, rebutting a Time magazine opinion piece that described President William Lai (賴清德) as a “reckless leader.” The article, titled “The US Must Beware of Taiwan’s Reckless Leader,” was written by Lyle Goldstein, director of the Asia Program at the Washington-based Defense Priorities think tank. Goldstein wrote that Taiwan is “the world’s most dangerous flashpoint” amid ongoing conflicts in the Middle East and Russia’s invasion of Ukraine. He said that the situation in the Taiwan Strait has become less stable
REASSURANCE: The US said Taiwan’s interests would not be harmed during the talk and that it remains steadfast in its support for the nation, the foreign minister said US President Donald Trump on Friday said he would bring up Taiwan with Chinese President Xi Jinping (習近平) during a meeting on the sidelines of the APEC Summit in South Korea this week. “I will be talking about Taiwan [with Xi],” Trump told reporters before he departed for his trip to Asia, adding that he had “a lot of respect for Taiwan.” “We have a lot to talk about with President Xi, and he has a lot to talk about with us. I think we’ll have a good meeting,” Trump said. Taiwan has long been a contentious issue between the US and China.
FRESH LOOK: A committee would gather expert and public input on the themes and visual motifs that would appear on the notes, the central bank governor said The central bank has launched a comprehensive redesign of New Taiwan dollar banknotes to enhance anti-counterfeiting measures, improve accessibility and align the bills with global sustainability standards, Governor Yang Chin-long (楊金龍) told a meeting of the legislature’s Finance Committee yesterday. The overhaul would affect all five denominations — NT$100, NT$200, NT$500, NT$1,000 and NT$2,000 notes — but not coins, Yang said. It would be the first major update to the banknotes in 24 years, as the current series, introduced in 2001, has remained in circulation amid rapid advances in printing technology and security standards. “Updating the notes is essential to safeguard the integrity
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