This is the VOA Special English Economics Report.
week American Treasury Secretary Tim Geithner announced details of a plan aimed
at removing billions of dollars in bad debts from American banks.
government program has two parts. One
involves buying groups of loans, like home mortgages. The second involves buying securities or
financial investments tied to loans. Under
the plan, the federal government will partner with private investors to buy bad
loans made by banks.
These bad loans, also called toxic assets,
have weakened American banks and interfered with normal lending. The Treasury Department says it will offer
low interest loans to private investors so they will buy billions of dollars in
toxic assets and get American banks lending again. The Obama administration
says if the plan is a success, it could remove as much as one trillion dollars
in bad loans.
No one knows how much government
money might be needed. But during the
past six months, more than seven hundred billion dollars has been committed to
cleaning up the bad loans in the banking system.
plan was first announced last month without many details. The stock market
fell. However this week, news of the
plan sent prices higher on the American and international stock markets. Following the announcement Monday, share
prices of thirty major American industrial stocks increased almost seven
percent. This was the biggest one-day gain
since October. Mister Geithner said it will take several weeks for his plan to
be properly judged by financial markets.
The deep international economic
slowdown began in August, two thousand seven.
That is when failures in the American home mortgage market caused financial
markets to decrease lending.
First the American and then the world
economy slipped into recession. Since
then, several efforts to unlock credit have failed. Some experts say there will
be no other choice but short-term nationalization of troubled banks if the
Geithner plan fails to help the financial system.
Secretary Geithner also called for increased powers to control other financial
businesses, like the insurance company American International Group. Mister Geithner said the Obama administration
will continue working with Congress on details of the proposal.
that's the VOA Special English Economics Report, written by Brianna Blake.
Transcripts, MP3s and podcasts of our programs are at voaspecialenglish.com. I'm Steve Ember.