Tags: paulson | bailout | speech

Paulson: $700 Billion Should Be Enough

By    |   Wednesday, 12 Nov 2008 11:08 AM

Treasury Secretary Henry Paulson says the government will expand the reach, although not necessarily the total, of the $700 billion bailout program, known as the Trouble Asset Relief Program (TARP).

New recipients could include non-banks like the secondary market for student loans, auto loans, and credit card securities.

“When we set up the TARP, the focus was on illiquid assets. This will not be the focus. We have kept open the possibility of targeted actions, but it’s not the focus,” Paulson said.

In addition, Paulson admitted that he almost immediately abandoned the idea of buying up toxic assets, instead focusing on buying preferred shares in banks to shore up their foundations.

The cost would be substantial, Paulson warned, opening the door to an expansion of the bailout, although he said he has no timeline for going to Congress for more money.

The TARP has spent nearly half of the $700 billion originally requested, and Paulson must ask for the remaining $350 billion from Congress.

“I am still comfortable that with the $700 billion we have what we need,” Paulson said.

Mortgage modification programs remain a possibility, Paulson said.

However, don't expect the bailout to be easily extended to non-financial companies, Paulson warned. The automakers have been asking Congress for $50 billion in cheap loans to stay afloat.

"We care about the automakers, they are a key part of our manufacturing industry," Paulson said.

"We need a solution, but the solution needs to be one that leads to viability. The intent of the TARP was to deal with the financial industry. We need to get credit flowing, get lending flowing. That's where my focus is."

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Treasury Secretary Henry Paulson says the government will expand the reach, although not necessarily the total, of the $700 billion bailout program, known as the Trouble Asset Relief Program (TARP).New recipients could include non-banks like the secondary market for student...
paulson,bailout,speech
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2008-08-12
Wednesday, 12 Nov 2008 11:08 AM
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