The government will take on a mountain of risk while trying to create an artificial market for the loans and debt securities. Critics worry about possible fraud and further banking system damage.
Reporting from Washington and Los Angeles — The Obama administration’s impending effort to buy about $1 trillion in toxic assets in partnership with private investors — aimed at solving the most intractable part of the credit crisis — is now generating widespread fear that it is vulnerable to manipulation and carries sharp risks for taxpayers.
The program represents the biggest gamble yet in the federal bailout, but its still-hazy details have prompted bankers, economists, federal investigators and politicians to question whether it will solve the financial crisis. More than 400 written comments were recently submitted to the Treasury Department, many of them sharply negative.
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In a speech to the Economic Club in Washington D.C., Treasury Secretary Timothy Geithner said the U.S. bears a “substantial share” of the responsibility for the global financial crisis, and he believes the U.S. must recover first in order to return the rest of the world to growth.
Struggling to bridge deep divides over how to revive a paralyzed global economy, the leaders of the world’s largest economies agreed Thursday to bail out developing countries, stimulate world trade and regulate financial firms more stringently. But President Obama conceded that there were “no guarantees” that those measures would reverse the biggest global downturn in six decades.
U.S. President Barack Obama held his second press conference since taking office Tuesday night, focusing largely on his rescue plan for Wall Street and his country’s troubled economy.