September 26, 2008 / 12:36 AM / 11 years ago

World Bank's Zoellick says bailout a 'critical step'

NEW YORK, Sept 25 (Reuters) - World Bank President Robert Zoellick said on Thursday a $700 billion bailout plan to rescue the U.S. financial system is a “critical step” but there is a lot more to go in dealing with banks’ illiquid assets.

“Something like this has to be done and the devil is in the details,” Zoellick told Reuters, during former U.S. President Bill Clinton’s philanthropic summit in New York City.

“I think it’s a critical step. But there’s still a lot more to go,” he said. “They’ll have to operationalize how they purchase the assets, they have to decide how they dispose of the assets and then the critical piece of the recapitalization of the financial institutions, which can happen parallel.”

U.S. Rep. Barney Frank, the powerful Democratic chairman of the House Financial Services Committee, has said the rescue plan would allow the government to take part-ownership of banks, ban companies who sell toxic assets, and implement measures to help some Americans avoid losing their homes.

“When the U.S. has problems it tends to force them up earlier, I mean in Japan this sort of process took 10 years and so it’s not surprising there’s an awful lot of Sturm and Drang about this as it goes forward,” Zoellick said. “But it will go forward and there will be oversight.” (Editing by Bernard Orr)

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