NEW YORK, (Reuters) – The United States tried to save its financial and automotive industries yesterday, with President Barack Obama urging bankers to sell their toxic assets and his autos task force finalizing a rescue plan.
Obama met America’s leading bankers at the White House and stressed the importance of removing toxic assets from balance sheets so financial institutions could start lending again.
Many bankers came out expressing support for the private/public partnership that could buy up to $1 trillion of underperforming debt from the banks, though the issue of how to price that debt remained unanswered. Some banks may prefer to unload those assets later, once the economy recovers.
“The president opened up by talking about the importance of dealing with toxic assets and getting banks lending again,” White House Spokesman Robert Gibbs said. “It’s fair to say that they agreed on the need to update the framework of regulations.”
Obama, already dealing with two wars, a recession and a complex rescue of the financial system, also seeks to rewrite regulation to curb the type of risk-taking that nearly wrecked the banks.
He will seek common ground in London next week during a Group of 20 meeting of leaders from the world’s leading industrial and emerging economies. But first, he will unveil the next phase of a bailout plan for the auto industry on Monday.
General Motors Corp and Chrysler face a March 31 deadline from U.S. officials to act on a request for up to $22 billion more in emergency funding to help them ride out the weakest auto sales in three decades. The U.S. Treasury has already made $17.4 billion available to the automakers. In a somewhat positive sign for policy-makers and manufacturers, reports yesterday showed U.S. consumer spending rose for a second consecutive month in February and sentiment edged up in March.
“It is too early to bet on a consumer renaissance, because consumers are still facing severe headwinds from declining employment and reduced wealth. But the worst appears to be behind us,” said Nigel Gault, chief U.S. economist at IHS Global Insight.
While Japan edged closer to deflation as both domestic and external demand faltered and Europe slid closer to zero inflation, with Germany’s consumer price index slowing to its lowest level in nearly a decade, rising prices were a concern in the United States.