Private Sector Likely to Have Role in Government Bank Bailout Plan

WASHINGTON -- The overhaul of the government's $700 billion financial rescue program will likely include a partnership with the private sector to buy troubled assets, and administration official said Monday.

The official says the plan will use government money to support private sector purchases of bad assets that are weighing on banks' balance sheets and keeping them from resuming more normal lending.

The official spoke on condition of anonymity because certain details of the plan are still being worked out. Treasury Secretary Timothy Geithner is scheduled to announce the proposal on Tuesday.

National Economic Council Chairman Larry Summers told "FOX News Sunday" that the private sector can't do it alone.

"We can't just say, "Private sector, please invest," not given the size of the financial mess that we inherited," he said. "With the right strategic approaches, Secretary Geithner believes that we can bring in substantial private capital, and that's something we all ought to be able to agree on, that where we can catalyze private capital, that's a better root to solving this problem than government resources."

The bailout program has come under heavy criticism for distributing billions of dollars with few requirements on how banks would use the money. It is also expected to continue to rely heavily on capital injections into banks although with more strings attached in terms of caps on executive compensation and enhanced monitoring to make sure banks use the money to increase lending.

The overhauled program will likely feature a significant expansion of a Federal Reserve program designed to unclog lending to consumers and small businesses by widening that plan to cover other types of loans such as those dealing with commercial real estate.

The administration has said it will devote up to $100 billion of the remaining $350 billion to programs to combat a rising tide of mortgage foreclosures.

The Bush administration, led by then-Treasury Secretary Henry Paulson, committed the first $350 billion of the $700 billion program, leaving the final half for the Obama team. While many banking experts believe billions more eventually will be needed to deal with the worst financial crisis in seven decades, the new plan will not seek additional support from Congress at this time, according to congressional and industry officials who are in contact with the administration.

The Associated Press contributed to this report.