Tuesday, 10 February 2009

Reuters Gives Details on Bank Bailout Plan in the U.S.

According to Reuters, the Treasury Department's bank rescue plan will set $50 billion for foreclosure mitigation, $100 billion for ''bad bank´´ public-private partnership, $100 billion to expand Fed’s TALF program, and another $100 billion for bank capital injections. The news company obtained the information from sources familiar with the drafting of the plan.

This indicates that there is growing concern over the quality of loan portfolios and balance sheets, and the ability of banks to ramp up capital. The Obama administration said it would seek to provide Main Street first with an aid package, suggesting it was less concerned about the health of banks. The Reuters story suggests that the new plan would also extend the Federal Reserve's programme to revive consumer and mortgage lending, stretching up aid to $1 trillion in loans -- mainly aimed at holders of illiquid asset-backed securities and short-term debt.

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