This is the VOA Special English Economics Report.
banks are still not lending. They worry that they will not have enough capital
to cover losses. But the situation denies many businesses the credit they need
to operate, and further slows a struggling economy.
the United States, the government has so far provided almost one hundred fifty billion
dollars to banks, mainly through buying shares. Yet this may not be enough to save some major banks. By
some estimates, banks have at least one trillion dollars in losses that they
have not yet reported.
new administration of President Barack Obama is considering ways to save banks.
One possibility is to expand federal guarantees
against losses on some troubled financial assets. The government has already
offered guarantees to Bank of America and Citigroup. But the cost of this kind
of insurance could be huge.
Another possibility is to create a so-called
bad bank. It would take questionable securities held by other banks. The idea
would be similar to the Resolution Trust Corporation set up by the government
in nineteen eighty-nine. It was formed to sell assets from failed savings and
it is difficult to put a price on troubled securities. Taxpayers would lose
money if the government pays too much. And if it pays too little, banks could
Some people see nationalization as the
answer. That is when a government takes ownership of a private business, often with
the idea of selling it back to investors later. Existing shares become
the early nineteen nineties, Sweden nationalized some banks and later sold their
troubled assets, recovering some costs. But a similar effort in the United
States, the world's biggest economy, could take years. And critics warn that lending
and politics do not mix.
up with a plan to fix the banks and the financial system is now the job for Tim
Geithner. The Senate confirmed him this week to replace Henry
Paulson as Treasury secretary. Tim Geithner's last job was head of the New York
Federal Reserve Bank.
said he is the best person to deal with the financial crisis. But one-third of
the Senate, mostly Republicans, voted against him.
faced criticism for his failure to pay thirty-four thousand dollars in taxes when
he worked for the International Monetary Fund. He blamed "careless
mistakes." As Treasury secretary he is the nation's chief tax collector.
And that's the VOA Special English Economics Report,
written by Mario Ritter. I'm Steve Ember.