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Treasury's toxic asset plan could cost $1 trillion

Treasury's toxic asset plan could cost $1 trillion

The Obama administration is using a multi-pronged attack to get at the heart of the nation's financial crisis _ a mountain of toxic assets weighing on banks' balance sheets.
The plan developed by Treasury Secretary Timothy Geithner aims to purchase as much as $1 trillion in troubled assets, utilizing the resources of the $700 billion bank bailout fund, the Federal Reserve and the Federal Deposit Insurance Corp.
The initiative _ details are set for release on Monday _ will seek to entice private investors, including big hedge funds, to participate by offering billions of dollars in low-interest loans to finance the purchases and also sharing risks if the assets fall further in value.
When Geithner unveiled the initial outlines of the administration's overhaul of the bank rescue program on Feb. 10, the markets took a nosedive. The Dow Jones industrial average plunged by 380 points as investors expressed disappointment about a lack of details.
Christina Romer, head of the president's Council of Economic Advisers, said Sunday that it is important for investors to know that the administration is bringing a full array of programs to confront the problem.
"I don't think Wall Street is expecting the silver bullet," she said on "State of the Union" on CNN. "This is one more piece. It's a crucial piece to get these toxic assets off, but it is just part of it and there will be more to come."
Geithner is also expected to unveil this week the administration's proposal to overhaul bank regulations to try to ensure that the financial crisis _ the worst to hit the country in seven decades _ is never repeated.