This is a real challenge. We shall see how things go …
From the link:
As lawmakers pressed the Obama administration for details of how it would assist financial firms that have been rapidly deteriorating, Treasury Secretary Timothy F. Geithner said Wednesday the administration is working on a comprehensive plan to ”repair the financial system.”
Mr. Geithner declined to provide any specific details or to address rising calls for the creation of a government institution to buy or guarantee the declining assets at several of the nation’s largest banks. He discouraged speculation that the plan would include the nationalization of some banks.
”We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he said.
But bank stocks surged on hopes the government was moving toward creating a ”bad bank” to purge toxic assets from balance sheets that are rapidly deteriorating as the economy worsens. On Wednesday, the Federal Reserve cautioned that the economy was still spiraling downward on many fronts.
According to several Wall Street officials, senior administration members spent the weekend and the last few days reaching out to top bankers for their views on how a bad bank should be structured. Lawrence H. Summers, head of the White House’s National Economic Council; Sheila C. Bair, the Federal Insurance Deposit Corporation chairwoman; and Mr. Geithner have been involved in the talks, the Wall Street officials said.