Geithner's Bank Plan Out Next Week

The Obama administration put the finishing touches on a plan to remove troubled assets from banks’ balance sheets that will be unveiled early next week.

Treasury Secretary Timothy Geithner intends to expand the Federal Reserve’s new $1 trillion Term Asset-Backed Securities Loan Facility to buy frozen assets, according to people familiar with the proposal. The revamped Fed program will sit alongside the Treasury’s planned public-private investment funds, while the Federal Deposit Insurance Corp.’s role will probably involve buying distressed loans, the people said.

“We’re going to move quickly to lay out a new financing program to deal with these legacy assets,” Geithner said in an interview with Bloomberg television at a meeting of Group of 20 finance ministers in Horsham, England, last weekend. “We have and expect to see a lot of support for this program.”

Geithner’s next step to cleanse banks’ balance sheets so they can start lending again will be crucial after the lack of detail in a rescue he outlined last month caused a sell-off in financial stocks. The initiative’s success will depend on the participation of financial institutions, some of whose leaders yesterday criticized congressional proposals to tax Wall Street bonuses. Read more at Bloomberg