Secretary Geithner is taking a lot of heat regarding the new stimulus plan for not giving enough details, but here is some insight of what the Financial Stability Plan, formerly the Troubled Asset Relief Program, is going to contain.
Unveiled Tuesday morning by U.S. Treasury Secretary Timothy Geithner the Financial Stability Plan along with proposed economic stimulus legislation, the new plan is designated to support the flow of credit necessary for recovery.
Secretary Geithener described the plan as having a comprehensive approach, and said that the Treasury department will work in conjunction with Federal Reserve, the FDIC and other financial agencies to "bring the full force of the United States government to bear to strengthen our financial system so that we get the economy back on track."
The plan includes the establishment of three new programs to "strengthen the nation's banks, bring in private capital to restart lending and to go around the banking system directly to the markets that consumers and businesses depend on."
THE THREE NEW PROGRAMS ARE:
-" Stress test" to ensure that the nation's largest banks can withstand a worsening economy
- A public private partnership that will permit the purchase of up to $500 billion worth of distressed assets.
-A consumer and business lending initiative to leverage up to $1 trillion to encourage the secondary lending markets.
In addition, Geithner said the government will launch a comprehensive housing program that will include guidelines to reduce foreclosures and increase loan modifications. Details of that plan will be announced in the next few weeks.
The impact of the Financial Stability Plan on the banking industry in general and on specific companies, including Bank of America, will become clearer as details of the plan emerge in coming weeks.
Bank of America has said it strongly support efforts by the U.S. government to respond to the challenges facing the U.S. economy. Bank of America Chairman and Chief executive Office Ken Lewis and chief executives of seven financial institutions that have received government support testified at a House Financial Services Committee Hearing on February 11.
You can learn ore about the Financial Stability Plan at www.financialstability.gov
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