WASHINGTON (AP) -- The Obama administration's latest attempt to tackle the banking crisis and get loans flowing to families and businesses rely on a new government entity, the Public Investment Corp. to help purchase as much as $1 trillion in toxic assets on banks' books.
The plan that Treasury Secretary Timothy Geithner intends to announce Monday aims to use the resources of the $700 billion bank bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp.
The initiative will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases and also sharing risks if the assets fall further in value.
When Geithner released the initial outlines of the administration's overhaul of the bank rescue program on Feb. 10, the markets took a nosedive. The Dow Jones industrial average plunged by 380 points as investors expressed disappointment about a lack of details.
Christina Romer, head of the Council of Economic Advisers, said Sunday that it's important for investors to know that the administration is bringing a full array of programs to confront the problem.
"I don't think Wall Street is expecting the silver bullet," she said on CNN's "State of the Union."
"This is one more piece. It's a crucial piece to get these toxic assets off, but it is just part of it and there will be more to come," she said.
Also in the coming week Geithner is expected to disclose the administration's proposal to overhaul bank regulations to try to prevent a repeat of the financial crisis.
