US Geithner Said Likely To Suggest Leveraging EFSF In TALF-Like Pgm For Europe

U.S. Treasury Secretary Timothy Geithner, in meetings with European officials on Friday, is expected to recommend they leverage the European Financial Stability Fund with a program used to calm U.S. markets
during the 2008 crisis, Reuters reported Thursday on its website, citing a European Union official.

"Geithner will probably insist on the importance of leverage to have more funds to ring fence the big Europeans, Italy and Spain, and to find a solution for Greece," Reuters quoted a EU official as saying.

"The leveraging of the EFSF -- I think this is something that he will put on the table," the official said.

"There could be some openness to the proposal."

The U.S. program -- the Term Asset-Backed Securities Loan Facility -- was used to help jumpstart the asset-backed securities market.

A second EU official, however, told Reuters that such a move may present problems. "One of the difficulties is that leverage may be seen as a potential liability," the second EU official said. "But it deserves to be looked at in detail."

Canada has made the same suggestion to Europe, a third EU official said.

"It could help those countries where the sovereign bond market is still curable," the official said.