Summers says private capital key to bank bailout
Treasury postponing new financial rescue plan, senior Obama adviser says
By Ronald D. Orol, MarketWatch
Last update: 11:09 a.m. EST Feb. 8, 2009
WASHINGTON (MarketWatch) — A key Obama administration official said Sunday that new, soon-to-be-announced financial measures by the Treasury will include creating incentives for the private sector to invest in troubled banks.
“It can’t all be private capital, but with the right kinds of government guarantees and the right kinds of financing, strategic approaches, [Treasury Secretary Timothy] Geithner believes we can bring in substantial private capital,” said Obama’s chief economic advisor Lawrence Summers on Fox News Sunday.
One measure the Treasury is considering would create a “bad bank” or “aggregator bank” that would buy illiquid mortgage securities. It would be partly funded by some of the remaining money from the existing $700 billion Troubled Asset Relief Program fund, but the majority of the funds would come from the private sector, according to a Wall Street Journal report Sunday.
I can’t wait to see how many rush to this latest opportunity.