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White House economic adviser Lawrence Summers details the Treasury Department's plan to clear "toxic" assets from banks through a combination of public and private investment.
The Obama administration launched a new effort today to buy up bad assets from banks, and it touched off the strongest rally on Wall Street in nearly five months, with major indexes gaining roughly 7 percent.
The Dow Jones Industrial Average surged 497 points to finish above 7,775. The Nasdaq index rose 98 points to close above 1,555. And the Standard and Poor's 500 was up 54 points to finish near 823.
Judy Woodruff has our lead story report.
Details of the plan were worked out at the Treasury and next door at the White House, where this morning President Obama met with Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke.
BARACK OBAMA, President of the United States: The good news is that we have one more critical element in our recovery, but we've still got a long way to go, and we've got a lot of work to do. But I'm very confident that, with the team that we've got assembled, we're going to be able to make it happen.
The plan is designed to persuade private investors to help buy up to $1 trillion in so-called "toxic" assets. Billed as "the public-private investment program," it gets an initial infusion of up to $100 billion.
The money will come from the TARP, the financial rescue package approved by Congress last fall. The ultimate goal is to get bad debts related to mortgages and securities off the books at banks and, in turn, get them lending again to boost the economy.
Buying those bad housing debts was the original rationale for the TARP last fall, but no one could say what they were worth, and it never happened.
This morning, Christina Romer, the head of the White House Council of Economic Advisers, told ABC this new initiative addresses that problem.
CHRISTINA ROMER, Head of President Obama's Council of Economic Advisers: The market for these so-called toxic assets has basically disappeared. And so the reason the government is coming in at all is to try to recreate this market.
But it is going to be an open bid; that's part of why we're going in with the private sector. They're going to have money on the line, just like we are, and the whole idea is to make sure we don't overpay for them, right? What we think we're going to be doing is bidding what these things are actually worth.
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