Posted by Stephen Mills; Group1A
Treasury Secretary Timothy Geithner told CNBC that the government's highly-anticipated plan to deal with troubled mortgage loans and assets is just the latest effort to stem the financial crisis.
"It's the next step in the series of efforts we're taking to make sure that the banking system is doing what it should do, which is to provide credit for the economy," Geithner said in a taped interview to be aired on CNBC at 2 pm ET.
The plan announced Monday calls for both private and federal funds to purchase toxic assets, using low-cost government financing, government guarantees and government equity as incentives.
Under a typical transaction, for every $100 in soured mortgages being purchased from banks, the private sector would put up $7 and that would be matched by $7 from the government. The remaining $86 would be covered by a government loan provided in many cases by the Federal Deposit Insurance Corp.
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