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| US unveils new $1.5 trillion plan | US unveils new $1.5 trillion plan |
| (10 minutes later) | |
| US Treasury Secretary Timothy Geithner has unveiled a comprehensive $1.5 trillion (£1.02 trillion) bank bail-out plan to beat the financial crisis. | US Treasury Secretary Timothy Geithner has unveiled a comprehensive $1.5 trillion (£1.02 trillion) bank bail-out plan to beat the financial crisis. |
| Under the plan, the size of a key Federal Reserve lending program will be expanded to $1 trillion from $200bn. | Under the plan, the size of a key Federal Reserve lending program will be expanded to $1 trillion from $200bn. |
| In addition, a public-private investment fund of $500bn will be created to absorb banks' toxic assets. | In addition, a public-private investment fund of $500bn will be created to absorb banks' toxic assets. |
| "Right now critical parts of our financial system are damaged," Mr Geithner said. | "Right now critical parts of our financial system are damaged," Mr Geithner said. |
| "Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change," he added. | "Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change," he added. |
| Leading US stock indexes fell after Mr Geithner started his speech on the new plan. | Leading US stock indexes fell after Mr Geithner started his speech on the new plan. |
| Transparency and accountability | |
| Mr Geithner said the new plan should unfreeze the credit market, strengthen banks and "provide critical aid for homeowners and for small businesses". | |
| "And as we do each of these things, we will impose new higher standards for transparency and accountability," he added. | |
| He said that the public-private investment fund to buy up risky assets will be seeded with government money and could be expanded to $1 trillion. | |
| The expanded Federal Reserve lending program will support lending to small businesses and consumers, including credit card lending and student loans, and also cover the troubled commercial real estate market. | |
| The government also will give banks access to additional capital from the Treasury's original $700bn bail-out fund "as a bridge to private capital". | |
| But that will come with strict terms, including full disclosure and limits on executive pay. | |
| "This assistance will come with terms that should encourage the institutions to replace public assistance with private capital as soon as that is possible," said Mr Geithner. | |
| Crisis 'not over' | Crisis 'not over' |
| We don't know yet if we'll need additional money, or how much President Obama Q&A : Bank bail-out plan | We don't know yet if we'll need additional money, or how much President Obama Q&A : Bank bail-out plan |
| President Obama said on Monday that Mr Geithner's plan would be a template for "restoring market confidence". | President Obama said on Monday that Mr Geithner's plan would be a template for "restoring market confidence". |
| "The credit crisis is real, and it's not over," added the president. | "The credit crisis is real, and it's not over," added the president. |
| President Obama has so far said it is too early to say whether the $700bn bank bail-out scheme, officially called the Troubled Asset Relief Program (Tarp), will need more funds. | President Obama has so far said it is too early to say whether the $700bn bank bail-out scheme, officially called the Troubled Asset Relief Program (Tarp), will need more funds. |
| "We don't know yet if we'll need additional money, or how much additional money we'll need," he said. | "We don't know yet if we'll need additional money, or how much additional money we'll need," he said. |
| Tarp was passed by President Bush in October, whose administration spent the first $350bn. | Tarp was passed by President Bush in October, whose administration spent the first $350bn. |
| Meanwhile, President Obama's wider economic stimulus plan is facing a crucial vote in the Senate. This is expected to cost an additional $800bn. | Meanwhile, President Obama's wider economic stimulus plan is facing a crucial vote in the Senate. This is expected to cost an additional $800bn. |