US Gov plans grand bailout
(23 September 2008 – USA) The US Government has put together a US$700 billion (A$840 billion) bailout plan for the US financial sector in an attempt to ease the current crisis.
The US Treasury Department has submitted legislation to the US Congress requesting authority to purchase troubled assets from financial institutions.
The treasury said that the rescue plan would be undertaken in order to promote market stability, and help protect American families and the US economy.
Details of the rescue plan show the US Treasury would get sweeping authority over the next two years to buy as much as US$700 billion of troubled mortgage-related assets from financial institutions.
The purchases are intended to be residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans.
It would also include other assets, as deemed necessary to effectively stabilise financial markets. The plan will lift the US public debt limit to US$11.3 trillion.
The bailout not only be available to US banks, but will also be available to banks with what has been deemed a ‘significant presence’ in the US, due to the impact that these banks will still have on US taxpayers.
The US Treasury Secretary, Henry Paulson, has urged other countries to follow the US lead by establishing similar bail-out funds.
Paulson said that he was seeking to reassure Congress and taxpayers that the US$700 billion was not necessarily going to be spent. He stressed that there were plans to sell the bad assets back into the market once conditions improved.
The treasury said that the rescue plan would be undertaken in order to promote market stability, and help protect American families and the US economy.
Details of the rescue plan show the US Treasury would get sweeping authority over the next two years to buy as much as US$700 billion of troubled mortgage-related assets from financial institutions.
The purchases are intended to be residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans.
It would also include other assets, as deemed necessary to effectively stabilise financial markets. The plan will lift the US public debt limit to US$11.3 trillion.
The bailout not only be available to US banks, but will also be available to banks with what has been deemed a ‘significant presence’ in the US, due to the impact that these banks will still have on US taxpayers.
The US Treasury Secretary, Henry Paulson, has urged other countries to follow the US lead by establishing similar bail-out funds.
Paulson said that he was seeking to reassure Congress and taxpayers that the US$700 billion was not necessarily going to be spent. He stressed that there were plans to sell the bad assets back into the market once conditions improved.
Subscribe