The banking system revamp, separate of the stimulus, goes hand in hand with the stimulus. But unlike the stimulus, Obama isn't expected to ask for more money for the bank makeover, rather, the new plan is expected to depend on some private money, along with the remaining $350 billion in bailout funds. The Wall Street Journal seems to be the original source previewing how the new funds will be used to save the banking system, but the details are still sketchy until Timothy Geithner reveals the plan tomorrow.
WSJ: The effort to restore confidence to the financial system comprises a broad range of tools and government agencies. It includes fresh cash injections into banks; new programs to help possibly 2.5 million struggling homeowners; a significant expansion of a Federal Reserve program designed to jump-start consumer lending; and, lastly, the mechanism to allow banks to get rid of bad assets.
The administration's plans have evolved over the past several weeks as it has considered and discarded a host of ideas, with financial markets anxiously awaiting details. Mr. Geithner had planned an announcement Monday but delayed it a day to allow the focus to remain on the stimulus bill in Congress.
The aggregator bank, which some refer to as a "bad bank," would be designed to solve a fundamental challenge: How can banks purge themselves of their bad bets without worsening their weakened condition? Read more
