US to reveal bailout overhaul
Treasury secretary to reveal aims for financial-rescue-plan revamp in speech.
The Bush administration was sharply criticised for distributing billions of dollars from last October’s bailout, or Troubled Asset Relief Programme (Tarp), with few requirements on how banks would use the money and with little transparency.
Stimulus bill
Geithner’s speech was originally scheduled for Monday but was delayed partly so that the Us senate could approve the US president’s current massive economic stimulus bill.
It also comes as Barack Obama, the US president, is to hold his second “town hall” meeting in Florida to discuss the latest government stimulus plan, which the senate is due to vote on at around the same time on Tuesday.
It is thought that the revised bailout plan will have more restrictions in terms of caps on executive compensation and better monitoring to ensure banks are using the funds to improve lending.
Banks have been condemned by the administration and economists for not extending credit to consumers despite being given billions of dollars by the US government for this purpose.
Strategic approaches
Lawrence Summers, head of the National Economic Council, said on Sunday that the administration had received several proposals for how the private sector could be involved in the solution to the banking crisis.
“With the right strategic approaches, Geithner believes that we can bring in substantial private capital, and that’s … a better root to solving this problem than government resources.”
The $700bn government bailout of financial firms was agreed last year as the firms suffered during a global financial crisis.
About $350bn of the money has been paid out so far.