In the future it looks like banks will be subject to a "stress test" before receiving new money... it the bank isn't healthy enough to stay the course, and lend money, they don't get it. Like handling 50 victims in a trauma ER, if the patient is likely to die the doctor might be better off not dispensing antibiotics.
Treasury will give $100 billion of the remaining $350 billion left in the Troubled Asset Relief Program directly to shore up bank capital.
New lending program is being created that will leverage up to $1 trillion to bring down borrower costs. Additionally a new $50 billion foreclosure mitigation program could be announced in the new two weeks.
A "bad bank" will buy problem assets. What's interesting about this? To avoid putting taxpayers on the hook for the large expense, the Treasury plans to use private capital to buy the assets.
The big problem still remains, how to you price and value these assets?
They are planning to be more transparent, I recently signed a petition to have full disclosure of all funds to the public so there is better accountability of where the funds go.
"This comprehensive strategy will cost money, involve risk, and take time," Mr. Geithner said. "We will have to adapt it as conditions change. We will have to try things we've never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted."
Now that is a statement of the obvious, but worth putting on the record.
