Treasury Secretary Timothy Geithner will be unveiling the Obama administration’s new bailout plan this morning. The plan is said to be a “three-pronged rescue program,” that is meant to “ease the credit crunch, including a public-private initiative to take bad assets off of banks’ balance sheets,” and provide ”mortgage loan and foreclosure relief and a new consumer lending initiative.”
Also “according to the summary,” obtained by CNBC, “the Treasury plan also includes measures to ‘increase transparency and accountability to protect taxpayers,’” and “restrictions on executive pay, and new tighter reporting requirements for banks receiving government aid.”
I’ve been appalled by the reports of corporate excess with the earlier bailout funds. Restrictions on what banks can do with taxpayer bailout money is welcome in my book, as is greater transparency.
President Obama did not address the issue of bank Bailout redux in his press conference last night, instead he told reporters he would allow Geithner his “moment in the sun” today, when he unveils the new program.
Word has it that there was some “spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands,” over the issue of the bailout. Geithner won out. His plan has got to be better than the last bank bailout or we’re all sunk.
UPDATE: Via the NY Times here’s details on the ”multi-pronged program” that Geithner laid out in his speech:
— A Public Private Investment Fund, jointly run by the Treasury and the Federal Reserve, with financing from private investors, to buy up hard-to-sell assets that have bogged down banks and financial institutions for the past year. Mr. Geithner said the new fund, often described as a “bad bank” for holding toxic assets, would start with $500 billion with a goal of eventually buying up to $1 trillion in assets.
— Direct capital injections into banks, which would come out of the remaining $350 billion in the Treasury’s rescue program.
— A vast expansion of lending program that the Treasury and Federal Reserve had already announced, which is aimed at financing consumer loans. The two agencies had originally announced their intention to finance as much as $200 billion in loans for student loans, car loans and credit card debt. Instead the program will be expanded to as much as $1 trillion.
The Federal Reserve in separate announcement elaborated on the lending program, saying ”it “could broaden” the plan to include both commercial and residential mortgage-backed securities.”
Both Geithner’s speech and the FED’s announcement were “met with a negative reaction on Wall Street.” The Dow dropped by 285 points less than an hour later.
Looks like the DOW did not find any inspiration from Geithner’s speech …
It was selling off anyway hc4bo, don’t this speech would have turned it around.
I commented last thread that it was too broad based. And to give the homeowner/mortgage mess a few sentences at the end is not helpful.
But as we all know the devil is in the details and there was a real lack of them.
I just want to know where this money is going, how it’s being used and why. I’m not in any mood for maintaining the lifestyles that these fat cats have become accustomed too. Just show me how it’s being spent and why.
Good luck on that one JA.
Obama has said that there will be an internet site so that all Americans can see exactly where the money is going.
kris Says:
February 10th, 2009 at 11:50 am
Good luck on that one JA.
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kris then where’s the transparency? Do we continue to reward failure with bailouts and expect those who have failed to continue with their lifestyles? Something about this equation is not computing in my rather little brain.
Did the avatars disappear for anyone else or is it just me?
The general impression Geithner left me with was that he’s planning rigorous oversight that will prevent billions of dollars from falling into a black hole — like what happened with Bush’s “oversight.”
The very fact that he was giving us a progress report today while the plan is still in development felt to me like a genuine attempt at transparency.
Audiegrl Says:
February 10th, 2009 at 11:58 am
Did the avatars disappear for anyone else or is it just me?
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AG
I think they disappeared for all of us.
Thanks Jane, my IT guys was over last night, and changed some things, so I was just making sure it wasn’t that. I hope they come back, it was cool seeing everyones pictures.
I think transparency is a wonderful concept, and this is just my opinion, but in this case I think it is just that – a concept.
My fear is that the requirements, when they are laid out in more detail, will cause the opposite effect.
Ok Petey – you seem to be up on so much of what’s going on (and I appreciate that because I’d be crazy by now trying to keep up) but I have one question for you about the stim pack :
Who is the money going to for education? The states or the schools? If the states, what’s to prevent them from using it for other purposes?
Fareed Zacaria ( I probably spelled that wrong) had an interesting panel on Sunday. It was three finance minsters from Europe. The women from France said that they had one bank that failed. She said that within 24 hours they had fired all of the top management and recapitalized the bank. I know everything is different in France and on a smaller scale but I was impressed with her.
Audiegrl Says:
February 10th, 2009 at 12:01 pm
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And it provided me with a quick overview as to who was on line. I actually could tell who was on by just looking at the avatars.
Chuck Todd just said that on background he was told they are going to let some banks fail.
Obama is coming on right now in FL.
“Word has it that there was some “spirited internal debate that pitted the Treasury secretary, Timothy F. Geithner, against some of the president’s top political hands,” over the issue of the bailout. Geithner won out.”
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Funny thing is, there is a story on Huffpo that basically states that officials from the Obama admin were basically laughed at at a meeting with the Senate committee when they went over to capitol hill to present the framework of their plan …
IF this plan they are calling a “Revised Tarp” manages to utilize the remainder of the Tarp funds from the failed former administration in concert with very little contribution from the American public, while still managing to eek out some form of noticeable improvement in bank lending and the foreclosure problem, the Obama administration can use that success as a collateral to inquire for more Funding in the future to completely immunize the Problem for future generation ( if that is possible – keyword = REGULATIONS ) …
Crowd is chanting ‘yes we can’.
Jane, I’m not particularly up on all the details, but I do know the package contains a mixture of targets, depending on the nature of the spending — which makes sense to me. My impression is that if a state (or other entity) accepts funds they will have to agree to restrictions and accountability — otherwise why would some of the conservative governors be debating whether to accept funds?
Seems to me no one will actually turn down money in the end, which will make it pretty hard for Republicans to demonize the spending. So they have to do all their demonizing now before it’s too late!
Charlie Crist is looking at 2012
And at the same time the Senate is voting on the bailout.
Jane:)
Hi LL
From Ben Smith
“Currently burning up the tubes: Rep. Paul Kanjorski’s description, late last month, of how close to the brink the global economy came on September 18. That was the day, recall, when Congressional leaders emerged stunned from a meeting with Henry Paulson, and gave him broad authority to spend $700 billion.
Part of what he said:
On Thursday at 11:00 a.m. the Federal Reserve noticed a tremendous draw-down of money market accounts in the U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.
If they had not done that, their estimation is that by 2:00 p.m. that afternoon, $5.5 trillion would have been drawn out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours the world economy would have collapsed. It would have been the end of our economic system and our political system as we know it.”
Yikes!
Video:
http://tinyurl.com/c4suvb
Audiegrl Says:
February 10th, 2009 at 12:22 pm
There’s more to it:
http://www.youtube.com/watch?v=p6KRXnYgu5I
Senate passed stim bill 61-37 as expected.
Hi back Jane…Sam keeping me busy!
Where is everyone? Hope we all didn’t take it in the you know what again with the sell off.
I’m guessing that the market did not like the idea that the “Bad Banks” get unlimited funds.
There are “Good Banks” who didn’t get involved in this fiasco, and they are about to get screwed from the market standpoint.
My other thought is that the sheer volume of the new debt has Wall St. adjusting. We’ll not be out of this one for at least a decade.
or…….it could be that this will so shake up gloabal markets that there’s no where to invest.
Anyway, the “Bad Bank” approach is not popular with a lot of folks. I get that one.
I have no real opinion on this deal. It’s a bit like reading intricate opinions on CIA activities.
Like I’ve ever been a spy?
I do have an opinion on Obama’s press conference/speech.
Thumbs down for fear-mongering and Republican bashing.
He set up a straw man.
Tacky, tacky.
Sure enough, CNN pre-picked responders weren’t very enthused.
A grad student after the press conference gave him a B- for going on-and-on.
A woman in Indiana was surprised at being called out by him as non-patriotic, just because she doesn’t agree on the stimulas bail-out.
Then there were the usual flowers for him going on-and-on by people who mistake wordiness for intelligence.
I have decided that there is no solution to the divisions other than sheer success.
So, if his policies work…..partisanship will ebb.
If not……..it won’t.
Good to see we got our 2 minutes of hate today.
On a related note, head of the IMF just declared this a global depression.
I don’t know a lot about the bank bailout so I won’t comment. However, I thought the town hall in Florida was excellent. I really felt for the African American man wearing the orange shirt and cap – also for Henrietta Hughes. If these people can’t stir some kind of compassion in Washington, nothing will. I know the man’s concern was obtaining gov’t programs while on unemployment. Not sure what he really meant by that, but I surely hope he would be eligible for food stamps and Medicaid while making 1100/month on unemployment. He can’t afford COBRA, even with a gov’t subsidy – would still be around 600/month for family coverage. That’s why I wish Obama would align himself with the House bill at least because it is stronger than the Senate version, even though it costs less then the Senate version.
Now we have the whining Republicans complaining about the stimulus bill on CNN. Their telling us what Americans want. I think we told them in November.
They want transparency. This cracks me up especially after 8 years of one of the most secretive government.
The house bill was rejected because of pork projects, not due to the safety net issues.
Nobody is disputing safety net issues.
But……but……..but……
I’ve been around homeless people for years, personally. There are plenty and have been for a long time.
If you’re just meeting them, welcome.
Even the latest polls suggest that people actually support the Republican ideas.
I realize that is shocking. They like Obama. They don’t like the stimulus bill.
I don’t think people object at all to welfare efforts right now. It’s needed.
I do think people are skeptical about government spending on government.
And none of us get the banking situation. Who knows?
The Repubs want the recession to drag out so they can use it as a wedge in the mid-terms.
“Elect us and we’ll fix this via tax cuts”
This coming from the people who created the mess in the first place.
Oh Justlin….that’s just such an awful perspective. Whether you agree with your conservative fellows or not, surely you can’t be so cynical as to honestly believe that anyone of us is not for one another right now.
I can’t STAND Obamafans, but even I know…..they want the best for all of us.
Are you truly that jaded?
I’ve thought about the reactions here to my posts, and I’ve come to a decision.
Took me time.
I’ve decided I accept this.
I wouldn’t say you guys have pushed me further into voting Republican.
I’m still at the same point on that issue, because that’s my own personal vote, and I don’t give that up.
But I do accept that this blog has established its parameters.
And I don’t fit in.
So, I leave Taylor with Geo.
I think he’s rude and uninformed.
But..,..I respect the blog owner.
She made it clear she likes his perspective.
So I will not stir up your cozy blog in the future.
I leave it to Geo.
Taylor has the right to set the tone of her blog, and I certainly don’t fit in.
That’s OK. That’s not the same as banning people.
I want to make that clear.
She never banned me, though she sure didn’t agree with me.
But, Geo won the “war of attitude.”
So Geo gets the kudos here.
Thanks for the transition stage, by the way.
And I do applaude Taylor for her posting policies.
I am hated, but I wasn’t banned.
I’ve found a load of sites where I’m not hated.
So that’s cool.
So, good luck to all of you. I never found you to be my enemy, except for Geo……because he’s so personal.
But I think he’s established the new direction for this site.
May you all find peace with Geo.
As Taylor said, “I’ll never ban you.”
This is someone who is insulting beyond belief.
So get the rules, guys.
Geo rules.
AnninCA Says:
February 10th, 2009 at 3:57 pm
So, I leave Taylor with Geo.
I think he’s rude and uninformed.
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I get the rude part but uninformed? that hurts.