While Mr Greenspan did not say how much extra might be needed, his comments indicate that the government will probably have to provide hundred billions of dollars over and above the money remaining in the troubled asset relief programme.
In a speech to the Economic Club of New York, Mr Greenspan said: “To stabilise the American banking system and restore normal lending, additional Tarp funds will be required.”
If the International Monetary Fund's estimate for unrealised losses of about $500bn (€400bn) is correct, that would imply a total capital need of $800bn to $900bn – much of which would have to come from the government. It has only about $100bn to $150bn left in uncommitted Tarp funds.