A high-ranking official in the Treasury Department outlined Monday government plans to utilize the $700 billion financial rescue package passed earlier this month.
Neel Kashkari, who became the Interim Assistant Secretary of the Treasury for Financial Stability on October 6, said the government's main goal is to use the Troubled Asset Relief Program, also known as the TARP, to restore capital flow to consumers and businesses.
"As you know, our credit markets are frozen and lending has become extremely impaired," Kashkari said in remarks before the Institute of International Bankers in Washington, D.C. "In recent months our government has taken strong and decisive actions, but a more systemic approach was needed."
Kashkari reported that 7 teams have been formed within the Treasury Department to implement the financial rescue plan. They include a team to identify which mortgage-backed securities to purchase, which residential mortgage loans to purchase, and an insurance program for the toxic assets.
In addition, Kashkari announced a program that allows the Treasury to purchase equity stakes in a "broad array" of financial institutions.
The law gives the Treasury Secretary broad and flexible authority to purchase and insure mortgage assets, and to purchase any other financial instrument that the Secretary, in consultation with the Federal Reserve Chairman, deems necessary to stabilize our financial markets -- including equity securities. Treasury worked hard with Congress to build in this flexibility because the one constant throughout the credit crisis has been its unpredictability.
Additional programs include on designed to halt the wave of foreclosures by keeping people in their homes, a team responsible for determining executive compensation, and a team focused on the new rules and regulations, including the establishment of a Special Inspector General.
The goal of the new rules is clear, Kashkari said - "to restore capital flows to the consumers and businesses that form the core of our economy."
"Achieving this goal will require multiple tools to help financial institutions remove illiquid assets from their balance sheets, and attract both private and public capital," he explained. "Our toolkit is being designed to help financial institutions of all sizes so they can grow stronger and provide crucial funding to our economy."
Selecting the best people for the job is important, and permanent appointments will be made in the future, Kashkari noted. In the interim, however, he introduced the interim officials.
Transparency will play an important part in the implementation of the program, Kashkari noted.
"Transparency will not only give the American people comfort in our execution, it will give the markets confidence in what form our action will take," he said.
However, time is of the essence, he said, stating that "we are moving to implement the TARP as quickly as possible while working to ensure high quality execution," despite the fact that a program of its magnitude would normally take months or years to properly establish.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.