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Treasury issues report on financial stabilization efforts

WASHINGTON, Sept. 14, 2009 -- The U.S. Treasury Department has issued a report describing the next phase of the government's financial stabilization and rehabilitation policies to provide the public with a status update on these programs and an explanation of the Obama Administration's strategy going forward.

"We are now in a position to adjust our strategy as we move from crisis response to recovery, from rescuing the economy to repairing and rebuilding the foundation for future growth," said Treasury Secretary Tim Geithner. "The critical imperative we face as a country is making sure that the same vulnerabilities in our system which gave rise to this recession are not allowed to trigger another. To do that, we must pass comprehensive regulatory reform legislation by the end of the year."

• Read the report in its entirety.

The Administration's financial policies were designed to achieve four broad objectives.

1. First, the Administration wanted to ensure that the financial system continued its core functions in support of the broader economy without interruption.
2. Second, the Administration sought to ensure that the financial system had enough capital to provide new credit to the economy by reducing uncertainty and mobilizing private sources of new capital for financial institutions.
3. Third, the Administration sought to restart key non-bank channels of credit intermediation that had been effectively shut down by the crisis.
4. Finally, the Administration sought to moderate the impact of the adjustment in the real estate sector on households by making new mortgage credit more available and by reducing the number of unnecessary foreclosures. 

The Administration is now hoping to stabilize and rehabilitate financial markets. Utilization of the government programs put in place to contain the financial crisis has already declined substantially. Most of these programs were designed to become unattractive once financial markets normalized.

But Treasury officials say the process of terminating crisis-related programs must be done in a measured way that does not derail the economic recovery.