Obama plans $2 trillion injection into US banks

30 January 2009

With the $350 billion injected into US banks from the $700-billion Troubled Asset Relief Program having failed to bring the banks back to their feet, the new US President now wants to inject another $2 trillion to make the bank start lending again to help get the US economy pull back from the credit squeeze.

The Wall Street Journal, citing people familiar with the matter, reported that the Obama administration is discussing ways to overhaul the existing US financial bailout as it has not restored confidence in either the banks to lend or investors to put their capital once again in the banks.

Obama had made it clear in his inaugural speech that he would do whatever it takes to stabilise the financial system to get credit flowing again to families and businesses.

The report said the new administration may announce the $2 trillion bank bailout plan plans in the next couple of days after finalising on the proposal and fine tuning the details.

The Obama  administration feels that if a massive dose of $2 trillion is injected into the banks, may alleviate their problems and enable them to start lending once again, which they are unable to do as most of them are still saddled with distressed securities and bad loans.

According to The Wall Street Journal, a Treasury spokeswoman said that the administration has many options for a comprehensive plan but no final decision has yet been made.