Three more bank failures; Next bailout plan to be announced next week?
But don't despair! Washington is riding to the rescue (again). The latest bank bailout plan, likely to include a combination of measures, is on track to be released next week according to the Washington Post. More details below ...
"The Obama administration has finished drafting the central elements of its plan to rescue the financial markets and is gathering feedback from regulators and Wall Street executives, sources familiar with the matter said yesterday.
"While some details need to be hammered out, the strategy is likely to be laid out publicly in about a week, the sources said.
"In finalizing the plan, officials have made a policy decision that could dismay lawmakers. The administration is likely to refrain from imposing tougher restrictions on executive compensation at most firms receiving government aid but instead retain looser requirements initially included in the Treasury's $700 billion rescue program, a source familiar with the deliberations said. Officials are concerned that harsh limits could discourage some firms from asking for aid.
"The administration envisions a range of initiatives to jump-start the consumer credit markets, provide aid to struggling homeowners, and motivate banks to increase lending. The plan will also offer banks more capital and buffer them against losses on portfolios of "toxic" assets, backed by failing mortgages and other troubled loans.
"Earlier this week, Treasury Secretary Timothy F. Geithner met with Federal Reserve Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. Chairman Sheila C. Bair and Comptroller of the Currency John C. Dugan to discuss the plan, a source said. They met again yesterday. Administration officials have also begun to talk to Wall Street executives to receive input on how the government might relieve banks of troubled assets, the source added.
"Several sources said Bair has been aggressively pushing for months for the government to use federal rescue funds to set up a government bank that would buy up the distressed assets. Such an institution would lessen the burden on her agency, which insures deposits at failing banks up to $250,000."