The Treasury is moving rapidly to ease "extremely impaired" credit markets, which should help all Americans across the country, said Neel Kashkari, Interim Assistant Secretary for Financial Stability, in his testimony on Thursday before the Senate Committee on Banking, Housing and Urban Affairs.
Kashkari said there is one simple goal in the program: "to restore capital flows to the consumers and businesses that form the core of our economy." He said the Treasury is helping financial institutions remove illiquid assets from their balance sheets and to attract both private and public capital. "Our programs are being designed to help financial institutions of all sizes so they can grow stronger and provide crucial funding to our economy."
He was quick to emphasize that the rescue package is not merely a bailout for executives on Wall Street. "Every American depends on the flow of money through our financial system. They depend on it for car loans, home loans, student loans and household needs. Employers rely on credit to pay their employees. In recent months, our credit markets froze up and lending became extremely impaired."
Kashkari said there have been "numerous signs of improvement in our markets and in the confidence in our financial institutions" since the announcement of the Treasury's capital purchase program. However, markets remain fragile, he added.
"We are moving quickly - but methodically - and I am confident we are building the foundation for a strong, decisive and effective program," Kashkari said, before describing in detail how each of the seven policy teams has made progress.
"e have accomplished a great deal in a short time. But our work is only beginning. A program as large and complex as this would normally take months - or even years - to establish. We don't have months or years. Hence, we are moving to implement the TARP as quickly as possible while working to ensure high quality execution," he concluded.
By Patrick McGee and edited by Sarah Sussman
©CEP News Ltd. 2008