Obama administration seeks to quell bank fearsFebruary 23rd, 2009 - 11:00 pm ICT by IANS
Washington, Feb 23 (DPA) President Barack Obama’s economic team sought to ease fears that US banks are on the verge of either collapse or nationalization, amid reports Monday that the government is considering a large ownership stake in Citigroup Inc.
The Treasury, Federal Reserve and other government finance agencies issued a rare joint statement assuring investors that the administration “stands firmly behind the banking system during this period of financial strain.”
A so-called “stress test” to review the health of 20 major banks is set to begin Wednesday. The review could give struggling banks access to more emergency government funds.
Hoping to stem another massive stock market downturn that gripped Wall Street last week, the group also said the government was working under a “strong presumption … that banks should remain in private hands.”
The statement made no specific mention of banking giant Citigroup. The Wall Street Journal reported Obama’s administration may increase its stake in the troubled banking giant to as much as 40 percent.
The government has already injected $45 billion in Citigroup in exchange for an 8-percent stake.
Tags: banking system, barack obama, citigroup, citigroup inc, economic team, emergency government, federal reserve, finance agencies, government finance, government funds, market downturn, massive stock, nationalization, ownership stake, presumption, private hands, stock market, stress test, verge, wall street journal