In what could be a major development for the future of the financial services sector, the incoming Obama administration is expected to overhaul the government’s financial bailout and Troubled Asset Relief Program.
A Page One report in the Washington Post today says Timothy F. Geithner has been holed up for eight weeks working on a new strategy for TARP. The new plan could be made public before Geithner’s confirmation hearings for secretary of the Treasury Department begin on Jan. 15 or thereabout.
According to the Washington Post, the essential elements of the revised bailout plan are expected to be uses of TARP funds to:
* Help homeowners avoid foreclosure;
* Unclog the credit markets by helping to finance loans to consumers, small businesses and municipalities;
* Take additional stakes in financial firms while forcing the companies receiving federal aid to submit to greater restrictions on executive compensation than were imposed by the Bush administration; and
* Establish a new bureau within the Treasury to manage TARP in an attempt to improve the program’s operations and oversight.
Another $350 billion of TARP funds have yet to be allocated by the Treasury Department and Congress. GMAC and Chrysler LLC are among the companies engaged in financial services that have received TARP capital infusions.
