TARP priority

摘要

The signing into law of America's $700 billion bail-out was never likely to save the financial system. In the event, it did not even come close. The Troubled Asset Relief Programme (tarp) could still do some good but to maximise its effectiveness, the Treasury will almost certainly have to stray from its core mission of buying distressed mortgage-related assets.rnIt has that option, thanks to a clause in the tarp that allows it to buy almost anything in the interest of stability, including direct stakes in banks, as long as it notifies Congress. Tellingly, a group of regulators issued a rare statement on October 6th, pointing out that the Treasury could "directly strengthen" bank balance-sheets. Hank Paulson, the treasury secretary, later said he would use "all of the tools" at his disposal, presumably including shoring up capital-starved banks with large dollops of preferred stock. He had played down this idea when the tarp was being drawn up, but the continuing deterioration of the financial system appears to have forced a rethink.