Wall Street Clean Up Sets off a Huge Rally
Byline: Sam Fleming
MARKETS soared on both sides of the Atlantic after the Obama administration unveiled the biggest effort to date to cleanse Wall Street of its toxic assets.
Bank shares recorded huge gains after treasury secretary Tim Geithner launched the Public-Private Investment Program - worth up to $1trillion ([pounds sterling]688bn).
The leading Wall Street indexes each gained more than 6pc, while banks rose by 15pc.
The rises came as the White House said the aim is to remove some of the poison from the balance sheets of America's struggling lenders, sparking a revival in lending.
The PPIP is the latest of a lengthy parade of Bank Aid measures which have thus far failed to stem the downward spiral in the world's biggest economy.
Geithner has been savaged for failing to decisively tackle the rot in the heart of the US banking system, but yesterday's announcement was met with a more enthusiastic response.
The FTSE gained 109 points to 3952.81, while the Dow Jones added 289 points to 7568 in afternoon trading.
The PPIP will be seeded with $75bn to $100bn of funds extracted from last year's illstarred Troubled Asset Relief Program, used to form publicprivate partnerships which will buy soured assets and loans.
The TARP scheme, launched in the dying days of the Bush administration, never got off the ground - in part because of the difficulty of deciding on a value for troubled assets.
It is hoped Geithner's scheme will get round these problems by involving private investors such as hedge funds in purchases. …