OECD supports US financial rescue plan

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PARIS, Sept 23 (Internet): The Organisation for Economic Cooperation and Development (OECD) grouping of 30 leading economies welcomed the 700-billion-dollar US plan to bail out the financial system Tuesday, saying markets should stabilise as policymakers worked on the details.
In a statement issued as global stock markets fell back with uncertainty over the plan, OECD Secretary General Angel Gurria said: "Announcement of the plan has already triggered a partial return to normality in US and world financial markets."
He was referring to a dramatic recovery by distressed stock markets and an easing of tension on other markets Friday when the initial outline debt rescue plan was announced.
Gurria said: "Such a recovery should continue as the plan's operational, fiscal, and legal details are worked out in ongoing negotiations between the US government and Congress and are enacted as federal law."
The OECD is an influential policy forum for 30 leading world economies. Gurria said: "We welcome and support the adoption of the systemic rescue plan announced by the US Government on September 19-20, which will contribute to re-establish the normal operation of financial markets and preserve employment and economic activity."
He said that the plan "seeks to provide the US Treasury with authority to issue up to 700 billion dollars of Treasury securities to finance the purchase of troubled mortgage-related assets from financial institutions that operate in the US."
He said: "By putting an end to the deleveraging of financial institutions, which was occurring at alarming speed through capital losses and credit contraction, the systemic rescue plan contributes to stabilise the US and world economies."
The proposals would create the conditions for the much needed recapitalisation of financial institutions, "as they are able to shed troubled mortgage-based assets, raise new capital, regain the trust of counter-parties and thus re-establish 'liquid' conditions in bank lending."