A new bank bailout plan of nearly $1.5t has just been unveiled by the US Treasury Secretary timothy Geithner.
The plan has been designed to expand the size of a major Federal Reserve lending program from previous $200bn to $1 trillion.
Furthermore, the additional funding will also be used to develop a public-private investment fund of $500bn for absorbing toxic assets of the banks and it would be expanded to nearly $1 trillion.
Mr. Geithner says about the plan that some important parts of our monetary system have badly damaged.
“The current financial system seems to work against recovery rather than catalyzing recovery and this dangerous scenario we definitely need to change,” Geithner added.
The plan has been designed to restore confidence in this badly damaged monetary system and to restart
But the question rises here is how eagerly the private sector will take part in the new funding and this new lending program.
On the other hand, an $838bn stimulus package for economic recovery has been backed by the US Senate and it will be reconciled with the one presented to the House of Representative.
Many US analysts have expressed skepticism about the plan that caused a sharp drop in major US stock indexes after this announcement.