Bank Systems & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Compliance

12:41 PM
Connect Directly
RSS
E-Mail
50%
50%

Quasi-Gov Fund to Buy Bad Loans; Up to $1T For Lending in Geithner’s plan

A public-private fund of up to $1 trillion to prompt banks to resume lending was among the measures Treasury Secretary Timothy Geithner unveiled today.

Geithner, detailing how the second half of the $700 billion bank bailout fund would be spent, said there will be a public-private fund to buy banks' toxic debt; direct capital injections into banks, and a vast expansion of a previously announced lending program, from $200 billion to $1 trillion.

As anticipated, Geithner did not take as hard a line on bankers' compensation, as President Obama indicated last week. Geithner's plan applies the $500,000 pay cap for executives at companies receiving assistance only to very senior executives, not all employees at bailed-out banks.

However, Geithner remarked: "American people have lost faith in the leaders of our financial institutions and are skeptical that their government has — to this point — used taxpayers' money in ways that will benefit them,"

The markets seemingly reacted unfavorably to his plan, with the Dow dropping 275 points shortly after the announcement.

Register for Bank Systems & Technology Newsletters
Slideshows
Video
Bank Systems & Technology Radio
Archived Audio Interviews
Join Bank Systems & Technology Associate Editor Bryan Yurcan, and guests Karen Massey and Jerry Silva from IDC Financial Insights, for a conversation about the firm's 11th annual FinTech rankings.