Treasury: Bailout Cash To Reach Banks Early This Week

The Treasury Dept. Monday continued its efforts to build confidence in the bailout plan, emphasizing the virtues of bank consolidation as part of its capitalization program.

David Nason, Assistant Secretary for Financial Institutions, told CNBC that "if we see acquisitions occurring, those stronger institutions will be better positioned to provide the result that we're looking for with the deployment of these assets."

Nason said the first $125 million in the program was executed with nine major banks last night and "will go out the door for those institutions early this week."

Nason restated the administration's primary goal to "put the fire out" in the financial sector, then analyze, debate and enact "regulatory reform efforts to make sure that this doesn't happen again."

Though the government plan focuses on recapitalizing banks, he did not rule out aid to non-depository institutions, such as insurers, saying "it is something we would have to consider."

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Nason also defended the government's highly controversial and poorly-regarded auction program, saying "there's a value to putting the government in place" in helping set market process fort distressed mortgage securities.

Nason's comments came as the government started up its new lending facility for the commercial paper market Monday.