Tsy's Kashkari: More Institutions May Still Need More Capital
Thursday December 4th, 2008 / 17h15
By Sarah N. Lynch Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- Despite all the actions that the U.S. Treasury Department has taken to stem the market crisis, Interim Assistant Secretary for Financial Stability Neel Kashkari told a Senate Appropriations subcommittee Thursday that more institutions may still need additional capital. "In order to continue their critical role as providers of credit, both banks and non-banks may need more capital given their troubled asset holdings, continued high rates of foreclosures, and stagnant global economic conditions," he said in testimony via video-conference during a subcommittee field hearing in Chicago. "We continue to look at additional capital strategies and, as we do so, we will assess the impact of the first capital program and also take into consideration existing economic and market conditions." Kashkari made his remarks to lawmakers just two days after the Government Accountability Office issued a stinging report which said the Treasury Department has failed to address a number of critical issues while implementing the $700 billion financial rescue plan, including how to ensure its efforts are successful. On Thursday, Kashkari tried to assure lawmakers that the department is committed to strong oversight of its large-scale rescue program. "We continue to take the necessary measures to ensure compliance with the letter and the spirit of the requirements established by the Congress, including regular briefings with the Government Accountability Office, the Financial Stability Oversight Board, the Inspector General and the Congressional Oversight Panel," he said. "We will also continue to meet all of the reporting requirements established by Congress." Kashkari tried to highlight the accomplishments to help the market so far, including the disbursement of $151 billion in capital purchases at 52 institutions, the establishment of a streamlined loan modification program first announced in November, and the Treasury's $20 billion commitment to invest in a new Federal Reserve facility aimed at providing liquidity to issuers of consumer asset-backed paper, among many other things. "Our system is stronger and more stable due to our actions," he said. "Although a lot has been accomplished, we have challenges ahead of us." The Wall Street Journal reported Thursday that the U.S. Treasury is currently considering a plan to revitalize the housing market by pushing down interest rates for loans to purchase homes. Kashkari made no mention of that plan in his prepared remarks, instead choosing to discuss past actions taken by the department, the Financial Housing Finance Agency and others to avoid preventable foreclosures. He also did not provide any hints as to whether or not the department will opt to tap the remaining $350 billion of the Troubled Asset Relief Program before the January inauguration of President-elect Barack Obama. "We believe we have taken the necessary steps to prevent a financial collapse and the authorities and flexibility granted to us by Congress are key to this," he said. -By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=G8rN%2BJs%2FXaaSgxy4%2FPCYtg%3D%3D. You can use this link on the day this article is published and the following day.
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