March 21 (Bloomberg) -- 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.
