By Tim Shipman
Last Updated: 12:09AM BST 05 Oct 2008
New questions have been raised about the $700 billion economic bail-out of the US economy as President George W. Bush warned that the world may have to wait weeks for the benefits of the rescue package to be felt.
In a radio address to the nation, Mr Bush hailed the historic deal, the largest in US history, for providing “the necessary tools to address the underlying problem in our financial system” and “put our economy on the road to recovery”.
But he warned: “While these efforts will be effective, they will also take time to implement. The benefits of this package will not all be felt immediately.”
Doubts about the package were fuelled when financial experts warned that conflicts of interest could arise because Wall Street financiers, many of whom have been blamed for causing the financial meltdown in the first place, will have a hand in spending the $700 billion of taxpayers’ money.
It is a move reminiscent of the US government’s controversial use of private military contractors to fight the war in Iraq.
Experts warned the approach is laden with financial pitfalls, since it may be impossible to find independent contractors who do not have a vested interest in which debts to buy and the price at which they buy them.
U.S. Treasury to Hire Up to 10 Asset Management Firms (Update1)
By Rebecca Christie and Robert Schmidt
Oct. 3 (Bloomberg) — The U.S. plans to hire five to 10 asset-management firms as Secretary Henry Paulson establishes the government’s new office for handling the financial bailout, a Treasury official said.
The department will also add about two dozen new employees, a mix of bankers, lawyers, accountants and others, the official said today on condition of anonymity. The Treasury’s first attempt to hold an auction to buy troubled assets from financial firms will take at least four weeks to set up, said the official.
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