The United States is ready to buy equity in a “broad array” of financial institutions, the Treasury's pointman on a $700 billion bank bailout, Neel Kashkari, said Monday. “We are designing a standardized program to purchase equity in a broad array of financial institutions,” Kashkari said in a speech to the Institute of International Bankers in Washington. “As with the other programs, the equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions,” he said, according to the prepared text. Kashkari said the program, launched in an effort to combat the worst global financial crisis since the 1929 market crash, would “also encourage firms to raise new private capital to complement public capital.” He outlined the Treasury's strategy under the Troubled Assets Relief Program (TARP), the $700 billion financial lifeline created through emergency legislation 10 days ago. Under the TARP, the government is authorized to take a wide range of exceptional measures, including the purchase of toxic mortgage-related assets from ailing financial institutions in a bid to unclog frozen credit flows. “Treasury is implementing its new authorities with one simple goal - to restore capital flows to the consumers and businesses that form the core of our economy,” Kashari told the bankers. “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 said. He said the toolkit was being designed to shore up financial institutions “of all sizes” so they could provide the credit that is the lifeblood of the economy. It was the first public speech on the TARP by Kashkari since he was tapped a week ago by Treasury Secretary Henry Paulson to serve as interim head of the program. On Friday, Paulson confirmed that the government was studying the possibility of buying stakes in ailing firms, effectively a part-nationalization strategy. Kashkari said that in the 10 days since the law was passed, the government had been working round the clock on the program. “We have accomplished a great deal on many fronts. We are moving quickly - but methodically - and I am confident we are building the foundation for a strong, decisive and effective program,” he said. Kashkari said that the Treasury was working “very closely with both domestic and international regulators to understand how best to design tools that will be most effective in dealing with the challenges in our financial system.” He said seven teams had been created to develop policies and tools required under the TARP, and one of them is in charge of insuring the troubled assets of banks. Kashkari also underscored that the authorities stood ready to prevent the failure of any financial institution considered vital to the financial system, as agreed by the Group of Seven major economies – Britain, Canada, France, Germany, Italy, Japan and the US - on Friday. He said the Treasury was planning to recruit two auditing companies to oversee the rescue program. “Throughout this process, we have kept in mind one clear priority: to protect the taxpayers by making the best use of their money,” he said. “A program as large and complex as this would normally take months - or even years - to establish,” he said. “We don't have months or years. Hence, we are moving to implement the TARP as quickly as possible while working to ensure high
