Bailout Plan: $2.5 Trillion and a Strong U.S. Hand
Michael Appleton for The New York Times
February 10, 2009
The White House plan to rescue the nation’s financial system, announced on Tuesday by Timothy F. Geithner, the Treasury secretary, is far bigger than anyone predicted and envisions a far greater government role in markets and banks than at any time since the 1930s. Administration officials committed to flood the financial system with as much as $2.5 trillion — $350 billion of that coming from the bailout fund and the rest from private investors and the Federal Reserve, making use of its ability to print money.
Mindful of previous financial crises at home and abroad that became protracted because governments moved too slowly, Mr. Geithner pointedly criticized the Bush administration for not acting boldly and quickly enough. But the initial assessment of the plan from the markets, lawmakers and economists was brutally negative, in large part because they expected more details.
Basic questions about how the various parts of the program would work, especially those involving the unsellable mortgages that banks are holding and preventing home foreclosures, were left for another day. Some Wall Street experts criticized the plan for relying too heavily on the same vague solutions proposed by the Bush administration.
The stock market, propped up for weeks on the expectation that Washington would finally deliver a comprehensive rescue plan, dipped almost as soon as Mr. Geithner began speaking in the morning. The Dow Jones industrial average fell 382 points, or 4.6 percent, by the time the market closed. Yields on Treasury bills jumped, indicating a flight from stocks to the safety of government bonds.
While traveling in Fort Myers, Fla., President Obama welcomed the news that the Senate voted 61-37 to approve its $838 billion economic stimulus bill Tuesday, but dismissed the market reaction to his bank rescue plan. “Wall Street, I think, is hoping for an easy out on this thing and there is no easy out,” Mr. Obama said in an interview with ABC News…
Wall Street didn’t like it – so it must be a good idea. My guess is that they are vague about the "unsellable mortgages" because the Banks want to sell them for what they think they are worth rather than settle for a little more than they’re really worth [which is nothing]. The point isn’t the Banks wishes, it’s making our economy work.
But I’m tired of their whining. The critics of the Stimulus Package are the Republicans who have been in power for eight years and are ultimately much of the cause of our problem. The critics of Geithner’s outline of the Bailout Plan for the Banks and Wall Street are the rest of the cause of the problem. My suggestion would be to present to another audience. These "cause" people are monotonous. If they didn’t want to be stuck with bad mortgages, why did they make the loans? If the Republicans had a better idea about getting the economy moving, why didn’t they do something constructive, like noticing it was collapsing?
As I wrote in another comment, about the book “Nothing To Fear”, my dream is that Republicans like Senators McConnell, Kyl, Vitter, Graham, McCain be(quotes from the author of the book Adam Cohen), “relegated to the margins”. “That the federal gov’t be the instrument of our united purpose” Tugwell( FDR’s assistant secretary of agriculture) dismissed these stubborn anti-New Dealers as “willful beneficiaries of the Old Order, who–in the words of a gifted Englishman—sat ” waiting for the twentieth century to blow over”. These current senators seem to be waiting for the 21st century to blow over.