This is the VOA Special English Economics Report.
This week American Treasury Secretary Tim Geithner announced details of a plan aimed at removing billions of dollars in bad debts from American banks.
The government program has two parts. One involves buying groups of loans, like home mortgages. The second involves buying securities or financial investments tied to loans. Under the plan, the federal government will partner with private investors to buy bad loans made by banks.
|Treasury Secretary Timothy Geithner speaking to lawmakers in Washington on Thursday|
No one knows how much government money might be needed. But during the past six months, more than seven hundred billion dollars has been committed to cleaning up the bad loans in the banking system.
The plan was first announced last month without many details. The stock market fell. However this week, news of the plan sent prices higher on the American and international stock markets. Following the announcement Monday, share prices of thirty major American industrial stocks increased almost seven percent. This was the biggest one-day gain since October. Mister Geithner said it will take several weeks for his plan to be properly judged by financial markets.
The deep international economic slowdown began in August, two thousand seven. That is when failures in the American home mortgage market caused financial markets to decrease lending.
First the American and then the world economy slipped into recession. Since then, several efforts to unlock credit have failed. Some experts say there will be no other choice but short-term nationalization of troubled banks if the Geithner plan fails to help the financial system.
This week Secretary Geithner also called for increased powers to control other financial businesses, like the insurance company American International Group. Mister Geithner said the Obama administration will continue working with Congress on details of the proposal.
And that's the VOA Special English Economics Report, written by Brianna Blake. Transcripts, MP3s and podcasts of our programs are at 51voa.com. I'm Steve Ember.