WASHINGTON (Reuters) - The Obama administration is expected to first unveil rules for banks receiving U.S. government help, including clarifications on lending and executive compensation, a source with knowledge of the government's thinking said on Sunday.
Those rules are expected to be announced as early as this week and the administration's plan to bolster the country's banking industry is expected about a week later, the source said.
President Barack Obama's finance team is working on the second stage of a $700 billion financial services rescue package, which was enacted last year to prevent the financial system from collapsing.
Under the Troubled Asset Relief Program (TARP), the Treasury Department has allocated about half to shoring up the banking system through direct capital injections. It also funneled money into troubled insurer American International Group
The Obama administration is working on a way to stem huge losses at banks caused by securities linked to mortgages that plunged in value as the housing market crashed.
Options under consideration include creating a "bad bank" that could take toxic assets off the balance sheets of banks in the hope of reviving lending; government insurance on troubled assets to help shield banks from future losses; and further capital injections by the government into banks, a source familiar with the administration's thinking said last week.
On Saturday, Obama pledged to help lower Americans' mortgage costs under a new plan to be announced soon to help revive the financial system and credit markets.
(Reporting by Rachelle Younglai; Editing by Steve Orlofsky)
