Administration seeks to free frozen credit markets

The Obama administration took a fresh shot at ending a national paralysis in lending today, saying it will team with investors to initially buy up to a half-trillion dollars of bad bank assets and ease credit for consumers and businesses. The program, announced by Treasury Secretary Timothy Geithner, was not the first such attempt by the new administration to revitalize an economy mired in recession. He pleaded for patience, saying work to rehabilitate the industry must go forward despite “deep anger and outrage” over bad banking practices. The newest initiative, he told reporters, will seek to harness government and private resources to purchase a half-trillion dollars of bad assets off the balance sheets of banks. And he held out the expectation that purchases eventually could grow to $1 trillion. The administration says it plans to use $75 billion to $100 billion from the government’s existing $700 billion bailout program for the bad-asset purchase. These resources would be supported by loans from the Federal Deposit Insurance Corp. and a loan facility being operated by the Federal Reserve.