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I want to understand the plan a bit better before I weigh in. The problem is, the fact sheet, as written, isn't clear to me. Worse, no one else seems to understand the plan either. Some expert reactions:Paul Krugman:
It’s really not clear what the plan means; there’s an interpretation that makes it not too bad, but it’s not clear if that’s the right interpretation. The plan deserves praise for what isn’t in it, at least as far as I can tell. There doesn’t seem to be provision for mass purchases of toxic waste at premium prices; there also doesn’t seem to be a massive “ring-fencing” guarantee against private losses on bad assets. In that sense the plan is better than what the last few weeks of leaks led us to expect.James Surowiecki:
The expectation was that [Geithner] was going to introduce a detailed, comprehensive plan for dealing with the toxic assets on bank balance sheets. Instead, he offered up what felt more like the outline of a strategy—with the government providing private investors with financing so they can buy the toxic assets—without much explanation of how it was going to work. The most dismaying line in the speech came when he said that Treasury was “exploring a range of different structures for this program.” Whatever the merits (or lack thereof) of the bigger idea, what people wanted to hear was that the structures to implement that idea were in place, not that Treasury is still trying to figure out what to do.Justin Fox:
There are two cures for financial panic: dramatic action and the passage of time. Geithner seems to be of the opinion that, with the panic substantially abated since last fall but a lot of expensive problems remaining, the moment for dramatic action has passed. He reportedly fought off efforts by others in the Administration to come up with something more crowd-pleasing today. A long slog it is, then.Felix Salmon:
The speech was surprising only in its vagueness. It's been over 11 weeks since Obama's announcement, and this is the best that Geithner can come up with?Robert Reich:
Geithner was vague about all this, this morning. That's understandable. But the vagueness works against him in terms of both objectives. The public wants specificity in terms of where the second tranche of TARP's $350 billion is going. More to the point, investors (whoever they are) need lots of specificity before they're going to put up a single dollar.Yves Smith:
Geithner is a living, breathing example of cognitive regulatory capture.Maybe you can do better. The fact sheet is available for download here. The New York Times summary is here.
