Treasury official urges patience on rescue fund

The Bush administration has been reluctant to send rescue funds to companies not in the financial services field.

The Treasury official overseeing the $700 billion rescue fund Monday urged patience as his department begins allocating the money to stabilize financial markets -- even as Congress has ramped up criticism over the program's implementation.

Interim Assistant Treasury Secretary for Financial Stability Neel Kashkari said in a speech that although much progress has been made, capital markets remain "fragile and confidence is still shaky." Kashkari made his remarks the same day Treasury announced that it would purchase $40 billion in preferred stock from American International Group Inc., making the insurer the first nonbank to receive funding under the program.

"This action was necessary to maintain the stability of our financial system," Kashkari said of the AIG investment, which will total $150 billion in federal funding to the insurer.

Kashkari's remarks come as House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., urged Treasury Secretary Henry Paulson Saturday to use the rescue program to help the domestic auto industry as General Motors Corp. teeters toward a bankruptcy filing. Senate Banking Chairman Christopher Dodd, D-Conn., said he believes the rescue fund could be available to the Big Three given the role that the industry plays in the economy and their respective financing units.

"We did extend the authority [in the law], but whether they want to provide that is another matter," Dodd said of Treasury.

The Bush administration has been reluctant to send funds through the rescue fund to companies not in the financial services field. One financial services lobbyist said he thought Treasury "could conceivably thread the needle" to invest in GMAC Financial Services and Ford Motor Credit but not to the automakers themselves. National Association of Manufacturers President John Engler said Monday that he did not think "any assistance can be unlimited" to the auto companies.

In remarks before the New America Foundation, Engler warned the cash burn rates of the Big Three automakers make a "pretty compelling case" that assistance may be necessary, but cautioned against the imposition of new regulations and taxes in return for a cash infusion. White House Press Secretary Dana Perino Monday signaled the Bush administration will be open to ideas from Congress on plans to accelerate $25 billion in Energy Department loans to auto companies. Expanding aid is also under consideration.

"If it wants to do anything in addition for the automakers, we'll certainly listen to ideas they have on how to accelerate the loans to viable companies, as laid out in the legislation," Perino said. She added Treasury officials are still reviewing the Pelosi-Reid letter. Rahm Emanuel, chief of staff to President-elect Obama, held off on Sunday on calling for Treasury to aid the Big Three.

Dodd and House Financial Services Chairman Barney Frank, D-Mass., also are concerned banks are not using federal aid to make loans, and instead in some cases are using it to help purchase other institutions. The Treasury has so far allocated $125 billion to nine major banks and is investing another $125 billion into smaller banks, thrifts and credit unions. Dodd's panel will hold a hearing Thursday on the program and Frank will hold one Nov. 18.

Darren Goode and Andy Leonatti contributed to this story.

NEXT STORY: Transition team wastes no time

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.