Geithner Call for Private Cash to Buy Toxic Assets

The Evening Standard (London, England), March 23, 2009 | Go to article overview
Save to active project

Geithner Call for Private Cash to Buy Toxic Assets


US Treasury Secretary Timothy Geithner today said that Washington could not fix the financial crisis alone and called on the private sector to help buy up to $1 trillion of toxic assets from banks.

He fleshed out plans to purge banks of troubled property-related loans and securities worth between $500 billion and $1 trillion in yet another attempt to drag the US economy out of recession.

The Treasury will initially put in $75 billion to $100 billion to kick-start the Public-Private Investment Programme which it hopes will attract investors including pensions funds, hedge funds and private-equity firms. Further funds would be raised by investors through cheap loans from the Federal Deposit Insurance Corp and Federal Reserve.

"Simply hoping for banks to work these assets off over time risks prolonging the crisis," Geithner wrote in the Wall Street Journal.

"Over time, by providing a market for these assets that does not now exist, this programme will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of the losses on bank balance sheets.

"The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury." The plan -- the latest to be launched since President Barack Obama took office in January -- was welcomed by the markets today. Shares in Asia rallied, led by banks and other financial stocks, and the FTSE 100 index was up 65.28 to 3,908.13 in London.

Matt Buckland, a dealer at CMC Markets in the City, said that the focus was firmly fixed on Geithner's proposals.

"The detail of the US plan will likely take some time to disseminate which could in turn help extend the rally," he said.

However, there are concerns that investors may not take part in the plan because Wall Street has been so heavily targeted by US lawmakers who want to claw back bonuses.

"Investors will be very wary of committing capital at the same time as Congress is vilifying Wall Street on bonuses," said Sean Callow of Westpac.

Others were more upbeat. "It's definitely our intention to get involved as one of the investment managers in this programme," said Curtis Arledge, managing director at asset manager BlackRock.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Geithner Call for Private Cash to Buy Toxic Assets


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?