WASHINGTON (Reuters) - The Obama administration on Sunday pushed back until Tuesday the announcement of a keenly awaited bank rescue plan as it pressed lawmakers to settle their differences over a huge economic stimulus package.
“We’re focussed on working with Congress to pass an economic recovery bill so we can create the jobs and make the investments necessary to get our economy moving again,” Treasury Department spokesman Isaac Baker said.
Treasury Secretary Timothy Geithner will outline the bailout plan in a speech at 11 a.m. EST (4 p.m. British time) on Tuesday, the Treasury Department said.
The announcement of the bank rescue plan -- which will seek to shore up some of the biggest commercial banks in the United States -- had been due on Monday.
But the Senate is now expected to be focussed on that day on a massive economic stimulus ahead of a vote on Tuesday.
For that reason, Geithner had postponed release of the bank plan, Baker said in a statement.
The stimulus and the bank rescue plan are key parts of President Barack Obama’s strategy for tackling the deepest financial crisis in the United States since the Great Depression.
Shares in major U.S. banks such as Bank of America and Citigroup have been volatile in recent weeks on speculation about the contents of the financial rescue plan.
White House National Economic Council Director Lawrence Summers said the administration wants to keep lawmakers concentrating on the stimulus plan.
“There’s a desire to keep the focus right now on the economic recovery program, which is so very, very important,” Summers said on ABC television’s “This Week.”
Summers urged lawmakers to craft quickly a compromise on competing House and Senate versions of the economic stimulus bill that could be worth more than $800 billion ( 539.6 billion pounds) and which the White House hopes will create 3 million to 4 million jobs.
After the Senate vote, the stimulus plan must still go through final negotiations between the Senate and the House of Representatives before it can be sent to Obama to sign it into law.
Geithner had been scheduled to detail on Monday how the administration plans to use the $350 billion remaining of the $700 billion so-called Troubled Asset Relief Program financial bailout program.
Banks worldwide have been laid low by huge losses on U.S. mortgage-related debts. The scarcity of credit is choking the U.S. economy, which is mired in a deepening recession.
The Bush administration used the bailout program primarily to inject capital into banks in order to keep them from crumbling.
Obama’s team is now turning its efforts to cleaning up the “toxic” assets clogging the financial system and it is expected to propose a range of measures, including further state acquisitions of stakes in banks, buying up some toxic assets and guaranteeing banks for losses on others.
Summers suggested the bank rescue plan may offer incentives for private investors to buy mortgage-related assets that have lost value because of the collapsed U.S. housing market.
“It can’t all be private capital,” Summers said on “Fox News Sunday.”
“But with the right kinds of government guarantees, with the right kinds of financing ... with the right strategic approaches, Secretary Geithner believes that we can bring in substantial private capital,” Summers said.
He pointed to a similar approach already adopted by the Federal Reserve, which has announced plans to buy mortgage-backed securities, resulting in dropping mortgage rates.
The head of Obama’s Council of Economic Advisers, Christina Romer, noted on CBS’ “Face the Nation” that the administration has already pledged that $50 billion to $100 billion would be used to help people with distressed mortgages.
Geithner told Democrat lawmakers on Saturday that the administration would require banks getting public aid under a new rescue plan to help struggling homeowners by reworking their mortgages, Democratic sources said.
The Obama administration is also designing a mortgage rescue program that would see Fannie Mae and Freddie Mac ease payments for hundreds of thousands of borrowers and offer a model for Wall Street to do the same, sources familiar with the plan said.
The government’s two largest foreclosure prevention initiatives of the last 12 months have fallen flat with only a handful of borrowers having been helped despite promises that hundreds of thousands would qualify.
Additional reporting by Tom Ferraro and Patrick Rucker; editing by Mohammad Zargham
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