Network News

X My Profile
View More Activity
2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Kashkari: Financial System Still 'Fragile'

Speaking this morning to the Securities Industry and Financial Markets Association (SIFMA) summit in New York about the state of the government bailout program, Neel Kashkari -- who's running the program -- said the U.S. financial system is still "fragile" and said Treasury is working hard to dole out the bailout money.

"We at Treasury are in deep execution mode, launching and implementing a program that would typically take months or years to establish," Kashkari said, according to remarks provided by Treasury.

The Troubled Assets Relief Program -- or TARP -- is the program that is executing the $700 billion+ government bailout/rescue plan. Kashkari was appointed by Treasury Secretary Hank Paulson to run it.

Kashkari said that his program has received "hundreds" of applications for federal aid from banks and already has granted preliminary approval to "many" of them.

"People often ask when we will see banks making new loans," Kashkari said. "First, we must recognize that less than half the money is out the door. Given the complexity of executing these numerous transactions, it will take a few months to complete all of these investments.

"Second, although progress has been made in the last month, our capital markets remain fragile and confidence is still shaky," he said. "As confidence returns to our institutions and our markets, we believe banks will put this capital to use by extending loans to creditworthy businesses and consumers.

"The last thing we want, however, is to encourage banks to resume the poor lending practices that are the cause of the current economic problems," Kashkari said.

Kashkari said, however, he has seen some encouraging signs.

"Since the announcement of our Capital Purchase Program, and the coordinated actions with the Federal Reserve and FDIC, we have seen numerous signs of improvement in our markets and in the confidence in our financial institutions," he said.

"For example, the average credit default swap spread for the eight largest U.S. banks has declined almost 245 basis points since before Congress passed the law," Kashkari said. "One month LIBOR has declined 243 basis points and three month LIBOR has dropped 192 basis points."

-- Frank Ahrens

The Ticker is Twittering!

By Frank Ahrens  |  November 10, 2008; 12:16 PM ET
Categories:  The Ticker  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati   Google Buzz   Previous: GM Shares Crushed By Analyst Downgrade
Next: McDonald's Laughs at Recession


Again, people from the Bush administration open their mouths and the market tumbles. When will good news(China stimulus) be left alone and allowed to let it's impact work? Their responsibility is to get working (maybe free overtime) and stop issuing warnings/whining about what hasn't been done.

Posted by: kidvid | November 10, 2008 3:13 PM | Report abuse

The comments to this entry are closed.

RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company