news Obama adviser sees private money helping banks

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Obama adviser sees private money helping banks


1 hour, 30 minutes ago





By John O'Callaghan and Philip Barbara

WASHINGTON (Reuters) - The Obama administration expects private capital to bolster government funds in helping U.S. banks to recover, Austan Goolsbee, a key adviser to the Democratic president, said on Sunday.
The new government of President Barack Obama, planning record spending to fight a recession and a financial crisis, has proposed a public-private partnership to cleanse the U.S. banking system of bad assets.
"That is a key component to the plan but that is not the only key component," Goolsbee told the "Fox News Sunday" program, stressing that the first step had to be a "thorough examination of what situation the banks are in."
"It's better to do this jointly with private capital," said Goolsbee, a member of the White House Council of Economic Advisers. "I believe there is a reasonable expectation that people will participate."
"Stress tests" for banks, being done to assess their ability to cope with a deepening crisis, and other elements of the recovery effort "cannot be rushed out," said Goolsbee, an economics professor, expert on tax policy and Internet commerce.
Mark Zandi, chief economist at Moody's Economy.com, said the private sector was ready to join the government to buy up toxic assets -- "if it is organized well enough."
"A lot of companies have been formed, hedge funds and other investor groups have been formed," Zandi told "Fox News Sunday.". They're waiting to understand what this program is all about.
"I don't think stimulus by itself is the answer. In fact, the most important thing is shoring up the banking system."
FOCUS ON HEALTHCARE
Goolsbee also said every effort must be made this year to keep the U.S. unemployment rate, now in the 8 percent range, from ballooning into double digits.
As part of his spending plan, Obama is pushing a campaign promise to overhaul the U.S. healthcare system, which now leaves some 46 million Americans without health insurance.
Goolsbee said the White House was "open to all ideas" for healthcare reform, including the taxing of workers' health benefits but "that is not in the president's budget."
"There are some people in Congress who are pushing this but that is not the president's idea," he said. "We will do whatever it takes to get affordable, quality coverage to all Americans."
Republicans oppose many of the healthcare proposals as a step toward socialized medicine. Obama also faces battles with pharmaceutical companies and insurers over the changes.
Barney Frank, the powerful Democratic chairman of the House of Representatives Financial Services Committee, said he supports a "single payer healthcare system like Medicare" -- the national program for the elderly.
"If some separate group of people want to make some separate arrangement for luxury benefits, that might be something to look at," he told "Fox News Sunday."
"That's not what I would like to see," he said. "I'm for a general health plan that looks like the Medicare plan for everybody."
(Editing by Bill Trott)