Obama confident latest bank rescue plan will work

By BEN FELLER, Associated Press Writer Ben Feller, Associated Press Writer 6 mins ago

WASHINGTON – President Barack Obama on Monday voiced strong confidence that his administration's financial rescue plan will get toxic assets off the books of banks in a way that allows taxpayers to "share in the upside as well as the downside."

"The good news is that we have one more critical element in our recovery," Obama said, surrounded by leaders of his economic team. "But we've still got a long way to go."

The plan's goal is to buy up the assets that are weighing on banks' balance sheets and are hampering banks' ability to resume more normal lending to consumers and businesses. The drop in lending has worsened and prolonged the recession. The plan seeks to draw in private investors with inducements like billions of dollars in low-interest loans to finance the purchases.

The government will take on a good share of the risk if the assets fall further in price.

Obama said the plan will be structured in a way that ensures that assets are sold at an accurate price, offering an upside to taxpayers.

"It's not going to happen overnight," Obama said, setting moderate expectations for the sale of the troubled assets. "But we think that we are moving in the right direction."

The administration said the program could grow to $1 trillion in purchases eventually, if it proves successful in attacking the bad-books problem that has been at the heart of the banking crisis.

The president also spoke in upbeat terms about the state of the recovery. He said there were "glimmers of hope" in the deeply depressed housing market, with low interest rates sparking activity. He said there were improvements in college and auto loans, the kind of lending critical to helping families and businesses.

Obama spoke after getting an economic briefing in the Cabinet Room. He was joined by Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and other key economic advisers.

Obama declined to take a question about how he could reassure skeptical taxpayers, who have grown weary of financing economic rescue efforts. The president said he would take questions instead at a news conference on Tuesday.