Geithner Unveils New Bank Plan

By Kevin Spak,  Newser Staff
Posted Feb 10, 2009 10:33 AM CST
Treasury Secretary Timothy Geithner, right, convenes his first meeting as chairman of the President's Working Group on Financial Markets, Thursday, Feb. 5, 2009, at the Treasury Department.   (AP Photo/Gerald Herbert)
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(Newser) – Attempts to revive the banking industry so far have been “inadequate,” Timothy Geithner said today, promising to “fundamentally reshape” the government’s plan to rescue banks, driven by more forceful action. “We want their balance sheets cleaner and stronger,” Geithner said. To do it, he’ll force banks to go through a “stress test,” and roll out a host of new and expanded programs.

Those programs will inject more capital into banks, scrub toxic assets from their books, and help struggling homeowners. But help will come with strings attached, including new higher levels of transparency and measures to ensure “that every dollar of assistance preserves or generates lending capital.” To scrub toxic assets, the government will turn to the private investors, using federal guarantees and funding to encourage them to buy.