It will be several weeks before the US Treasury will make its first purchase under the $700 billion Emergency Economic Stabilisation Act (EESA), according to US Treasury secretary Henry Paulson.Speaking at a press conference in Washington, DC yesterday, Paulson said the Treasury is moving “as quickly as possible” to decide the most effective process to value and purchase assets from the balance sheets of troubled banks – widely believed to involve some sort of reverse auction – but it will take several weeks before the scheme is fully operational. Along with the auction process, Paulson said progress is being made to implement other aspects of the plan. “We have several policy teams designing detailed programmes to purchase mortgage-backed securities, whole loans and equity-related instruments. In addition, we have begun work on compliance, executive compensation guidelines, foreclosure mitigation and oversight,” Paulson said. The US Congress voted through the $700 billion rescue package last week, having initially thrown out the proposal on September 29. However, the plan will not immediately resolve the crisis gripping the financial sector, Paulson warned. "One thing we must recognise – even with the new Treasury authorities, some financial institutions will fail. The EESA doesn’t exist to save every financial institution for its own sake.”
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