Obama tries to save Wall St, Detroit

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.

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