WASHINGTON — Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, gave a thumbs up to the plan outlined by the Obama administration Monday to unfreeze the credit markets and aid banks.
“This is a very positive step, and I hope they get it up and running quickly,” said Sen. Corker, who had previously blasted Treasury Secretary Timothy Geithner for a “lack of clarity” in dealing with the credit crisis.
The “Public-Private Investment Program” will use taxpayer funds along with private investment money from the likes of hedge funds to buy up at least $500 billion and up to $1 trillion in toxic assets, such as subprime mortgages, held by ailing banks.
Sen. Corker said he applauds the move to leverage bank bailout funds with private investments, so that taxpayer money isn’t being risked on a dollar-for-dollar basis. He called it an “enhancement” of the original bank rescue plan laid out by then-Treasury Secretary Hank Paulson last year.
Sen. Corker also said the plan will not add to inflation, as several economists have feared.
“Even though there are government guarantees involved, using private-sector debt keeps this particular program from being inflationary,” he said. “We’re not just printing U.S. money to fill the hole here.”
He said the next step will be for Mr. Geithner to announce the results of a stress test on the 19 largest banks that will determine whether those financial institutions are viable without further taxpayer help.
The initial positive reviews of the plan, which sent the Dow up nearly 500 points Monday, are a breath of fresh air for Mr. Geithner, who has been rocked by recent outrage over his handling of the bailout package for insurer AIG after it announced paying hundreds of millions of dollars in bonuses with its rescue funds.
Sen. Johnny Isakson, R-Ga., last week became the first lawmaker to call for Mr. Geithner to resign, saying he had lost credibility over the AIG bonuses.
Sen. Isakson could not be reached for comment Monday, but other Tennessee and Georgia senators would not go so far.
“Sen. (Saxby) Chambliss (R-Ga.) is disappointed in the job Geithner is doing but believes that the president has the right to surround himself with his own team,” said Chambliss spokeswoman Bronwyn Lance Chester.
Neither Sens. Chambliss nor Isakson voted to confirm Mr. Geithner’s appointment as Treasury secretary earlier this year.
Sen. Corker, who voted in favor of confirming Mr. Geithner, also said he would stay out of presidential administrative matters.
“I think the president still has a lot of faith in the Treasury secretary, and my guess is his job is not in jeopardy,” he said. “He’s being counted on to carry out some very important things.”
Sen. Lamar Alexander, R-Tenn., who holds the GOP’s No. 3 leadership post in the Senate and voted against Mr. Geithner’s confirmation, could not be reached for comment.
