WASHINGTON -- Administration officials were hammering out the final details Monday to get the recently enacted $700 billion financial rescue plan up-and-running, meeting with bank chiefs and tapping a number of top government officials and private firms to implement the massive program.
Treasury and Fed officials met with CEOs from a number of banks, including Morgan Stanley, Chase and Goldman Sachs, Monday afternoon. "We are bringing them in to finalize details," Treasury spokeswoman Brookly McLaughlin said.
Also Monday, the Federal Reserve and other central banks announced additional steps to keep money flowing in world financial markets, and governments across Europe took a series action to strengthen faltering banks in their own countries.
It is unclear when the details of the Treasury Department program will be announced.
Among other issues, the U.S. government was working on how it would purchase equity in a "broad array" of financial companies, according to Neel Kashkari, the Treasury official tapped last week to head the program. Such a program would quickly give banks cash to shore up their balance sheets and encourage them to lend to each other, other businesses and consumers.
Europe, with its series of actions on Monday, may have set the pattern.
"Washington has no choice but to go largely the same way that Europe and other countries already have — substantial nationalization of the banking sector," Donald Straszheim, vice chairman of Roth Capital Partners, said in a note to clients.
The U.S. government is also hammering out how it will conduct auctions to buy bad mortgage-backed assets in an effort to get the assets off bank books to facilitate lending, which has all but frozen up in recent months. Treasury is also working to design programs to buy mortgages from regional banks, to establish an insurance program for troubled assets and to help people hold on to their homes.
"A program as large and complex as this would normally take months — or even years — to establish. We don't have months or years," Kashkari, a former Goldman Sachs investment banker, said in a speech.
American Bankers Association president Edward Yingling, arguing uncertainty about the plan is acting "like a cloud over the investing public," urged Treasury Secretary Henry Paulson in a letter Monday to announce details soon. Treasury has tapped a number of people to act as interim heads in the department's newly created Office of Financial Stability, including executives from the Office of the Comptroller of the Currency, the International Monetary Fund and the Federal Reserve.
Kashkari said a number of additional hires, including the company that will hold the assets and run the auctions, will be announced within the next few days.
Friday, Treasury selected Simpson Thacher & Bartlett, the global, New York-based law firm to help design the equity-purchase program. The firm has already represented some of the companies involved in the financial meltdown.
The law firm helped represent Lehman Brothers, in its asset sale after the investment bank filed for bankruptcy last month, according to Securities and Exchange records. Additionally, Simpson Thacher has represented Washington Mutual on a variety of legal matters, the SEC records show. Federal regulators seized Washington Mutual last month and arranged a deal to sell most of its assets to JPMorgan Chase.
Kashkari said the Treasury was taking "aggressive steps" to reduce any potential conflicts of interest, acknowledging that firms with the expertise to design and run the program may also hold assets that could end up being bought by Treasury.
"Treasury will only hire firms when we are confident in our and their ability to manage any conflicts," he said.
Securities assets managers must have at least $100 billion in assets under management in order to be considered for the job. Companies who are applying to manage part of the Treasury program are being asked about their ability to sub-contract work to small-, veteran-, minority- and women-owned businesses.
Earlier in the day, the Federal Reserve and central banks around the globe, including the Bank of England and the European Central Bank, Monday announced they would provide an unlimited amount of dollars to foreign central banks to ensure they could meet financing needs.
Contributing: Kevin McCoy; Chu reported from New York