Financial Crisis
Today, I will provide a review of the financial market crisis and Treasury's strategy to implement the Troubled Assets Relief Program (TARP) to promote financial stability. First, I will briefly explain why the Administration took the unprecedented action to request Congressional approval for a $700 billion program to support the financial system. Second, I will explain why- as a first step- we decided to invest in healthy banks through purchases of capital, rather than buying illiquid assets. Third, I will discuss how the capital is being used by recipient banks. Finally, I look forward to answering your questions. Before I begin, I will give you a brief update on the latest statistics of the Capital Purchase Program, a program to invest in healthy banks of all sizes. On Friday, we executed 43 investments, bringing our total investment to $189 billion in 257 banks in 42 states and Puerto Rico. The largest investment was $25 billion and the smallest investment $1 million. In addition, after extensive preparation, we have also completed a term sheet for S-corps to participate in this program. The S-corp term sheet will be posted on the Treasury website tomorrow. The application period will open at that time and will remain open for 30 days. The Importance of the Financial System Let me begin by reviewing how the financial system affects Americans and their families. Banks serve as the primary intermediary between borrowers and savers. Americans save for their futures and their families. These savings of individual Americans are combined and made available to other people and businesses who need to borrow money for their specific needs. The financial system links millions of savers around the country with millions borrowers around the country through billions of individual transactions. This extraordinarily complex, but usually efficient system includes both banks, where people have their savings accounts, and other financial institutions that provide, for...
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