Obama to make bank lending a 'priority' in rescue programme
Barack Obama has signalled that he would toughen restrictions on banks and their oversight as part of a regeneration plan (Mark Wilson/Getty Images)
Monday January 26 2009
THE US financial rescue programme will be "very different" under President Barack Obama than it was under his predecessor, Lawrence Summers, director of the White House's National Economic Council, said yesterday.
"The priority is to get credit flowing again," said Mr Summers of the second half of the $700bn Troubled Asset Relief Programme (TARP). "It's going to emphasise transparency and accountability."
Mr Summers indicated that Obama's strategy for stabilising financial firms would be announced soon after Timothy Geithner, the nominee to be Treasury secretary, takes office. Majority Leader Harry Reid last week said he wanted the full Senate to consider Geithner's nomination, which is due to take place today.
"Secretary-designate Geithner, we expect, will be sworn into office very soon and when he is, soon after he will be laying out the plans and principles behind our approach," said Mr Summers, who cancelled plans to attend the World Economic Forum this week in Switzerland.
Mr Obama has signalled that he would toughen restrictions on banks and their oversight as part of a regeneration plan.
"Perhaps most importantly, the focus isn't going to be on the needs of financial institutions," Mr Summers said. "Of course we need to stabilise financial institutions -- without a stable financial system the economy can't work -- but the priority has to be getting credit flowing again so that people can buy cars, so that people can get mortgages, so the economy will operate."
Mr Summers said it wasn't clear whether more money would be needed beyond the current TARP funding. "We can make important progress and get started with the support that has been provided," he said.
Under President Bush, TARP focused on providing fresh capital to financial institutions. But some critics have said the approach didn't require banks to increase lending.
