Obama team works on bank rescue, private money eyed

By Kevin Drawbaugh

WASHINGTON (Reuters) - The Obama administration on Monday was nailing down details of a bank rescue plan expected to offer incentives to lure private investors into buying bad debts undermining the financial system and the economy.

U.S. Treasury officials were expected to brief congressional committee staffers on the plan on Monday evening, with Treasury Secretary Timothy Geithner scheduled to outline it publicly at 11 a.m. on Tuesday.

The plan and the administration's economic stimulus program are pillars of President Barack Obama's strategy for tackling the deepest U.S. financial crisis since the Great Depression.

A top White House aide said the administration will push private investors to buy compromised mortgage-related assets that are clogging bank balance sheets.

"Government capital is a last resort, and wherever possible, we want to catalyze the private sector to take responsibility for a situation that in many ways was created in the private sector," National Economic Council Director Lawrence Summers said on CNN.

Financial sector lobbyists said they doubt the Treasury is ready at this point to unveil a plan with the level of detail being sought by much of the banking community and Wall Street.

Major banks and Wall Street want the government to buy distressed assets off their balance sheets, but the administration has struggled with pricing the assets in a way that helps the banks while also being fair to taxpayers.

Summers said on Sunday the administration believes that with the right kinds of government guarantees and financing, the government can bring in "substantial" private capital.