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Geithner faces critical test over bank plan

Tim Geithner, America’s beleaguered Treasury secretary, faces a critical test of his credibility when he unveils a much awaited plan to take toxic assets off bank balance sheets – in an announcement that could come as soon as Thursday.

Mr Geithner, whose initial announcement last month on the troubled asset purchase plan disappointed the market, has become the target of harsh criticism in Washington and on Wall Street with some questioning whether he can deliver.

Speaking on condition of anonymity, several senior Democratic figures questioned whether Mr Geithner would have the credibility with the markets and Capitol Hill to push through a new request for funds. “The more time passes the more convinced I am that Tim Geithner is becoming a liability for the administration,” said one lawmaker.

Analysts say Barack Obama would face steeper odds persuading Congress to authorise more money to recapitalise the banking sector if Mr Geithner was the one making the request. Mr Obama included a $250bn financial sector bail-out item in the budget he announced last month implying that the administration will need up to $750bn more in troubled asset funds.

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This article was originally posted on FT.com

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