• ECONOMY
  • JANUARY 13, 2009, 11:32 A.M. ET

Fed's Kohn Says Rest of TARP Should Aid Banks

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BY MICHAEL R. CRITTENDEN

WASHINGTON -- The vice chairman of the Federal Reserve told U.S. lawmakers that the second $350 billion of the financial rescue should be used to reduce foreclosures and provide greater help to banks, including the potential for additional capital injections.

Fed Vice Chairman Donald Kohn, in testimony to be delivered Tuesday afternoon, said an "important use" of the funds will be to reduce preventable foreclosures. More broadly, he said policy makers need to continue to focus their efforts to restarting credit markets and providing liquidity. (Read the full testimony)

"Finally, I would expect the bulk of the remaining TARP funding ...

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