Rich Miller and Robert Schmidt
January 21, 2009
President Barack Obama’s economic team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion stimulus package being negotiated with Congress to alleviate the rapidly deepening financial crisis.
While full details of the rescue haven’t been settled yet, people familiar with the deliberations said the package is likely to include a $50 billion-plus program to stem foreclosures, fresh injections of capital into the banks and steps to deal with toxic assets clogging lenders’ balance sheets.
Officials “feel like they need to move quickly to provide some sense of calmness and assurance to the market that the government isn’t going to let this problem get out of hand,” said John Douglas, a partner at the Paul, Hastings, Janofsky & Walker law firm and a former general counsel at the Federal Deposit Insurance Corp.
In his inaugural address yesterday, Obama called for “bold and swift” action to resolve the crisis that’s cost the economy almost 2.6 million jobs last year, the most since 1945. Bank stocks sank yesterday, driving the Dow Jones Industrial Average to its worst-ever inauguration-day decline.