$9,700,000,000,000 (that's trillion) is enough to give every American man, woman and child a check for $32,000. Something is seriously wrong.
Timothy Geithner unveiled his economic overhaul of the banks.
And the market responded to the news by tanking, down 300 points.
TARP is no longer TARP.
The "Financial Stability Plan," as it's now called, consists of four main components:
1) It will set up a public-private fund to mop up to $500 billion of spoiled bank assets.
2) It will set up a consumer-lending facility to support up to $1 trillion in new lending.
3) It will devote up to $50 billion to help stem home foreclosures.
4) It will provide new funding to banks after a "stress test" to determine if the bank is healthy.
Um... we're talking $2 TRILLION MORE DOLLARS!!!!
From Breitbart:
US Treasury Secretary Timothy Geithner unveiled a stepped-up program Tuesday to stabilize the financial system including an initial fund of 500 billion dollars to absorb toxic assets.Reuters has more details.
The plan includes a public-private partnership aimed at soaking up toxic assets clogging the financial system. It also includes new efforts to boost consumer lending, limit home foreclosures and provide new capital for banks.
Geithner said the plan would "bring the full force of the United States government to bear to strengthen our financial system so that we get the economy back on track."
A key element will be a public-private investment fund started with 500 billion dollars "with the potential to expand up to one trillion dollars," to help cleanse the banking system of toxic real-estate assets.
This will serve the role of an aggregator bank, or "bad bank" to help financial institutions value their mortgage securities and clean up their balance sheets.
A second element will include additional capital injections into banks.
"While banks will be encouraged to access private markets to raise any
additional capital needed to establish this buffer, a financial institution that has undergone a comprehensive 'stress test' will have access to a Treasury-provided 'capital buffer' to help absorb losses and serve as a bridge to receiving increased private capital," the Treasury said.
Additionally, the Treasury and Federal Reserve will expand a program to boost lending for mortgages and other consumer and business loans to up to one trillion dollars.
Yup, we're well on our way to $9.7 Trillion in "economic recovery".
Remember, that's enough to pay off 90% of mortgages in the US and enough to give every citizen in the world a check for $1400.
Can someone please explain this to me like I'm a 5 year-old? Anyone see a problem here?
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