The plan, which would ideally involve a mix of government and private capital, aims to stabilize the U.S. financial system by injecting capital into banks, helping to determine prices of toxic assets weighing on firms' balance sheets and stemming foreclosures.
"We believe that the policy response has to be comprehensive and forceful," Treasury Secretary Timothy Geithner said in his speech Tuesday. "Instead of catalyzing recovery, the financial system is working against recovery. And at the same time, the recession is putting greater pressure on banks. This is a dangerous dynamic, and we need to arrest it."
The Wall Street Journal adds that "critical details of the plan remained unanswered, despite the weeks of planning leading up to Tuesday's announcement." Plan? That's not a plan, it's a fervent wish. No details at all on the foreclosure program, and precious few beyond platitudes about the mechanisms for dealing with toxic assets. The only real new information is the amount: $1 trillion total, $500 billion to start.
I don't envy Geithner his position. But he's known this was coming for months. I expected a little more than telling us that he wanted to spend a lot of money to help banks clean up their balance sheets. We knew that much already.
It is better written than the three pages of the original TARP proposal; but it has an eerily similar emptiness.
Boy, this Geithner guy is really off to a bad start.
His tax troubles were explained away on the grounds that he was the single best-suited person IN THE COUNTRY to lead the Treasury Department during our attempt to climb out of this hole (created, by the way, when he was the Federal Reserve's principal point person on regulation of the financial markets).
So then, this much-heralded maestro of the recovery produces THIS in response to the world's breath-baited expectations of the new administration's v 2.0 of the original bank bailout, which he helped design and execute and is now widely acknowledged to have failed.
And this is the best he could do after 3+ months to prepare?
I could have written this statement on the strength of a rehashing of what was already known and attempted combined with a little PR spit polish.
This is a shocking failure on the part of the administration, and no wonder the markets are down so drastically.
Some senator asked Geithner for a big picture of what is going to be spent this year by the Feds. Rather than answer the question, Geithner started talking about how important the stimulus package is. I looked at Geithner to see if I could figure out if he really believed what he was saying or was he just echoing the party line. Right then I was really having second thoughts about having a tax cheat as our top Treasury guy.
Sen. Dodd then interjected something (Dodd is the chairman of the committee that has oversight) and I thought "Wow, here is another guy who is compromised" (Dodd is an example of "oversight capture", which is similar to regulatory capture).
Has Geithner laid out his plan in black and white anywhere?