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Banks' Rescue Delayed

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The Washington Post

Published: February 9, 2009

WASHINGTON - A financial rescue plan that will deploy the balance of $700 billion to spur the flow of credit to consumers and businesses will have to wait another day.

The plan, a sweeping overhaul of the finance sector begun by President George W. Bush's administration, was to be announced today by Treasury Secretary Timothy Geithner. But President Obama said he wants to give Congress one more day to work on the bill.

Key elements of the plan:

ASSET INSURANCE: Offer insurance to banks against higher-than-expected losses on mortgage and other assets they expect to hold until maturity.

BANK RECAPITALIZATION: Make future investments in banks via convertible bonds or preferred shares, which could give the government partial ownership of some banks.

EXPANDED LENDING: Broaden $200 billion Federal Reserve program to add support for commercial real estate and residential mortgages.

FORECLOSURE RELIEF: Allot $50 billion to $100 billion to help prevent foreclosures.

PURCHASE OF TOXIC ASSETS: Buy some of the hard-to-value securities weighing down bank balance sheets.

ACCOUNTABILITY, OVERSIGHT: Require companies to disclose their actions to the government and public, and create rules that force them to use money to expand lending.

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