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.
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
SHIFT: Taiwan’s better-than-expected first-quarter GDP and signs of weakness in the US have driven global capital back to emerging markets, the central bank head said The central bank yesterday blamed market speculation for the steep rise in the local currency, and urged exporters and financial institutions to stay calm and stop panic sell-offs to avoid hurting their own profitability. The nation’s top monetary policymaker said that it would step in, if necessary, to maintain order and stability in the foreign exchange market. The remarks came as the NT dollar yesterday closed up NT$0.919 to NT$30.145 against the US dollar in Taipei trading, after rising as high as NT$29.59 in intraday trading. The local currency has surged 5.85 percent against the greenback over the past two sessions, central
RSS