Today, the Treasury Department is expected to introduce plans to create a government body to finance the purchase of as much as $1 trillion in toxic assets from ailing financial institutions.
The new entity would combine assets with private investors, as well as the Federal Deposit Insurance Corp. and the Federal Reserve, to buy those assets, a step seen as crucial to unclogging the balance sheets of banks and allowing credit to flow more freely. Administration officials were putting the finishing touches on the plan yesterday and were reaching out to some of the private investors whose participation is key to the plan's success.
Also, the Obama administration this week is expected to announce new proposals for financial regulation, executive pay, accounting standards, the structure of the International Monetary Fund and other issues ahead of a summit of 20 major nations in London on April 2.
At the summit, leaders will seek to reach a consensus on those and other coordinated steps meant to combat the global economic crisis and prevent a repeat. In particular, France and Germany are seeking to win assurances at the summit that Washington is committed to tighter financial regulations.
On Thursday, Geithner is scheduled to testify before the House Financial Services Committee about overhauling financial regulation. He is likely to call for giving the Federal Reserve new powers to regulate the financial system as a whole, including power to oversee any institution that is big enough or intertwined enough to pose risks to the financial system.
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