US bailout efforts helped foreign countries during fin crisis

NEW YORK: Billions of dollars that the US government spent on shoring up its economy during the global meltdown had greater positive impact on foreign countries, such as Germany and France, than those nations' rescue plans had on American businesses, says a report.

Faced with an unprecedented meltdown in 2008-09 since the great depression, the US government had unveiled rescue plans, including the $700 billion financial package and guaranteeing massive debts and troubled assets.

The latest comments from the US Congressional Oversight Panel come at a time when the economy is grappling with slowing recovery and high unemployment levels.

"... it appears likely that America's financial rescue had a much greater impact internationally than other nations' programs had on the US," the Panel said in the report last week.

The panel has been established to look into the causes of the financial crisis.

"Banks in France and Germany were among the greatest beneficiaries of American International Group's rescue, yet the US government bore the entire $70 billion risk of the AIG capital injection program," it noted.

Going by the report, the American share of insurer AIG's rescue alone exceeded the size of France's entire $35 billion capital injection program. The insurer's bailout amount was also nearly half of Germany's total rescue efforts that was worth about $133 billion.

The $700-billion Troubled Assets Relief Program (TARP) had pumped capital into financial institutions, guaranteed billions of dollars in debt and troubled assets, and directly purchased assets.

According to the report, the American government could have reduced the pain of financial rescue if it had gleaned more details about foreign institutions that stood to benefit from these efforts.

"...if the US government had gathered more information about which countries' institutions would most benefit from some of its actions, it might have been able to ask those countries to share the pain of rescue," it added.

Meanwhile, the US Federal Reserve in its latest assessment of the national economy had concluded that the pace of recovery slowed down in recent months. The unemployment jobless rate is hovering at 9.5 per cent and 1,31,000 jobs were lost last month.