Treasury: Still Want Banks to Sell Bad Assets

The Treasury Department will continue to encourage banks to sell problem loans and securities to government-sponsored investment funds despite recent changes to the mark-to-market accounting rules, according to secretary Timothy Geithner. While the accounting rules may make its easier for banks to hold on to problem assets, the secretary stressed that the administration wants banks to clean up their balance sheets so they can raise private capital and increase lending. The proposed public-private investment funds give banks a way to sell problem assets and cleanse their balance sheets. "We will make sure that we encourage that kind of action," Mr. Geithner said on the CBS news show "Face the Nation." The secretary also said the administration is prepared to remove chief executives of banks receiving government assistance if those CEOs are not moving to restructure and strengthen their institutions. "We will do what is necessary to make sure our banking system emerges out of this stronger. The economy depends on credit to recover," he added.