Geithner to Announce Financial-Rescue Plan Feb. 9

Geithner to Announce Financial-Rescue Plan Feb. 9
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3x1RI4a9BYY&refer=home
By Rebecca Christie and Robert Schmidt
Feb. 5 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner will in four days unveil the administration’s financial-recovery plan, aiming to shore up the nation’s banks and restart lending to households and businesses.
Geithner will make a speech Feb. 9 in Washington, a Treasury official said. Hours later, President Barack Obama will hold a news conference that will address the stimulus package Democratic leaders predict will win congressional approval.
Officials plan a combination of approaches for their overhaul of the $700 billion Troubled Asset Relief Program. Along with further injections of taxpayer funds into major financial firms, the strategy is likely to include guarantees for illiquid assets on banks’ balance sheets and possibly some form of a so-called bad bank that would purchase toxic investments, people familiar with the matter have said.
“Our agenda is to begin to shape the architecture of a financial recovery plan that’ll help get credit flowing again and help reinforce the recovery and reinvestment plan now working its way through the Congress,” Geithner said before a meeting of the President’s Working Group on Financial Markets.
The group includes Federal Reserve Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair.
January Job Cuts
Geithner’s announcement next week will come on the heels of indications that economists predict will show the U.S. recession is deepening.
A Labor Department report tomorrow may show the U.S. lost 540,000 jobs in January, according to the median estimate of economists surveyed by Bloomberg News. The unemployment rate may rise to 7.5 percent, a 16-year high.
The S&P 500 Financials Index has dropped for six straight months and fallen about 27 percent so far this year. Shares of Citigroup Inc. have plunged 87 percent from a year ago and Bank of America Corp. is down 89 percent.
Earlier today, Senate Banking Committee Chairman Christopher Dodd urged the Obama administration to redesign the financial-rescue program to ensure that banks receiving aid increase lending and restrict salaries.
“For the sake of our economy and the public’s confidence in our ability to address this crisis, we must see a sharp change in the direction of this program under new management,” Dodd, a Connecticut Democrat, said in an opening statement at a hearing in Washington.
Dodd also said he wants to see a long-term plan for using TARP funds, “stricter limits” on executive pay and bonuses, “clear guidelines” for banks to boost lending and a foreclosure prevention program.
To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net Robert Schmidt in Washington at rschmidt5@bloomberg.net. Last Updated: February 5, 2009