Geithner Says ‘Range of Options’ Considered for Banks
Jan. 28 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner said the department is considering a “range of options” for its financial rescue plan, with the goal of preserving the private banking system.
“We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he told reporters today in Washington.
Geithner was asked about the prospects of bank nationalization before a meeting with several officials charged with providing oversight for the $700 billion financial rescue effort. He said the administration would move “relatively soon” to announce its strategy.
“We are putting together what we hope will be a comprehensive plan for helping repair the financial system and bring recovery as a critical component to the president’s commitment to get growth going again and bring the economy back on track,” Geithner said.
Under pressure from lawmakers and taxpayers, upset that the rescue plan shows few signs of lifting the economy, the Obama administration plans to overhaul the effort. Geithner fielded questions from reporters for the first time as Treasury chief.
Without commenting on whether the administration would create a so-called bad bank to absorb troubled assets, Geithner said: “We’re looking at a range of options in that context and we hope to be in a position relatively soon to lay out what we believe is a viable program.”
The officials at the meeting included Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, and members of the Congressional Oversight Panel headed by Harvard law professor Elizabeth Warren.
Under Geithner’s predecessor, Henry Paulson, the Treasury allocated about half of the $700 billion program to inject capital into banks, help automakers, and guarantee assets for Citigroup Inc. and Bank of America Corp.
In its rescue efforts so far, the Treasury has taken ownership stakes in more than 300 banks as a condition of receiving aid. The government usually receives preferred shares and warrants, which can be converted into common stock and cashed out at the government’s request.
The Treasury, under the TARP, has not sought voting rights or control over day-to-day business.
Geithner, who took office two days ago, has pledged to make the bailout more transparent and yesterday offered plans to shield the program from political influence. Today Geithner said the Treasury will post contracts with TARP participants on the department’s Web site within days after deals are done.
“That’ll give the American public a chance to see those, to look at the detailed terms and conditions, in a relatively short time period after they’re concluded,” Geithner said.