In a speech this week, Secretary of the Treasury Timothy Geithner presented in broad terms what he described as "a new Financial Stability Plan" designed to "restart the flow of credit" and "clean up and strengthen our banks." Building on existing Treasury programs, the new multifaceted plan, potentially totaling more than $2 trillion, represents an unprecedented effort on the part of the federal government, working through the Treasury, the Federal Reserve, the FDIC, and other financial agencies, to improve the financial condition of the banking system, and to reestablish consumer and business credit.

Secretary Geithner outlined three programs. The first involves a "carefully designed comprehensive stress test" of financial institutions intended to clean and strengthen balance sheets and to provide additional capital investment if necessary through a to-be-formed "Financial Stability Trust." The second program involves creating a "Public-Private Investment Fund" to "provide government capital and government financing to help leverage private capital" for the purchase of "legacy loans and assets that are now burdening many financial institutions." The third program proposes an increase in the Term Asset Backed Securities Loan Facility (TALF) to up to $1 trillion to further support consumer and small business lending and to expand the TALF to include commercial mortgage-backed securities.

Secretary Geithner also stated that a comprehensive housing program will be launched "to address the housing crisis." Details of this program will be announced in the next few weeks.

To read Secretary Geithner's speech, please click here.

For further information on the Emergency Economic Stabilization Act, please contact:

Dominic J. De Simone, Co-Chair, Economic Stabilization and Recovery Initiative

Thomas A. Hauser, Co-Chair, Economic Stabilization and Recovery Initiative

Prior EESA Alerts

February 4, 2009
Significant New Restrictions on Executive Compensation for TARP Recipients

January 27, 2009
Special Inspector General of TARP to Begin Oversight Initiative

January 16, 2009
Treasury Department Issues Term Sheet and Announces February 13, 2009 Deadline for Subchapter S Corporations to Participate in the Capital Purchase Program

January 6, 2009
Federal Reserve Announces Additional Details for its Term Asset-Backed Securities Loan Facility (TALF)

December 12, 2008
Treasury Department Issues Closing Documents for Private Financial Institutions to Participate in the Capital Purchase Program

December 1, 2008
SEC Staff Issues Sample Guidance to CPP Participants Filing Proxy Statements

November 26, 2008
Federal Reserve and Treasury Announce Two New Programs To Boost Credit Availability

November 18, 2008
Treasury Department Issues Term Sheet and Announces December 8, 2008 Deadline for Private Financial Institutions to Participate in the Capital Purchase Program

November 14, 2008
Kashkari Details Future TARP Deployment Strategy

November 12, 2008
Treasury Secretary Details TARP Strategy 

November 7, 2008
Treasury Department Announces Solicitation Regarding Asset Management Services in Connection with EESA Capital Purchase Program

November 6, 2008
Beware: Is There a "Trojan Horse" in the Capital Purchase Program Securities Purchase Agreement?

October 23, 2008
Kashkari Testifies Before Senate Banking Committee

October 14, 2008
Treasury, Federal Reserve, and FDIC Joint Statement Capital Purchase Program

October 13, 2008
Remarks on TARP to Institute of International Bankers

October 7, 2008
Emergency Economic Stabilization Act of 2008/TARP

October 6, 2008
Employee Benefits and Executive Compensation Issues Connected to Emergency Economic Stabilization Act of 2008

October 6, 2008
Emergency Economic Stabilization Act of 2008


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