|Issue of the Day: Bank Proposal Calls for $1 Trillion|
Published Monday, March 16th, 2009
The Treasury Secretary is soon to announce the details to a plan calling for a public-private partnership: government financing buying up to $1 trillion in toxic bank assets and a comprehensive review of banks to determine how much of the remaining financial sector bailout funds will be needed for troubled banks. Geithner stated on Friday that the plan calls for the remainder of the $700 billion financial bailout fund, yet other bank stability plans may require a request of another $750 billion new funds found as a placeholder in President Obama’s budget.
By restructuring the bad assets held by the banks, the government hopes to increase the banks’ lending potential, thereby allowing businesses to increase investment and hire workers, which could increase consumer demand and overall economic health. The real gross domestic product contracted 6.2% in the last quarter of 2008, after a third quarter decrease by 0.5%, offset by the increase in government spending and a decrease in imports.