Some early reaction to the speech. Most appear distinctly underwhelmed. Yves Smith:
...here we have another scowling Treasury secretary, with a bit more hair than his predecessor, serving up the same fatally flawed approach as before: let's just throw money at the banks and hope they get better. This is tantamount to using antibiotics to treat gangrene. You waste good medicine and the progression of the rot threatens to kill the patient.
This is the killer quote from Geithner's speech: "We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it." In other words, we have a plan to have a plan. Ouch.
After listening to Treasury Secretary Timothy Geithner reveal the Obama bank bailout plan, I still have no idea what the government is going to do about pricing these so-called toxic assets. And that, my friends, is why I would guess the stock market is selling off.
There’s clearly a desire here to avoid nationalization. A strong desire. But if the situation in the banking sector is as bad as the skeptics tend to think, this plan is going to end up with the government owning a substantial share in at least some large banks.
The new plan has to take some chances with public money, but no more is on offer right now. The plan, at best, is a good effort at starting the process which demonstrates that Congress is going to be asked for another trillion dollars or so when it becomes painfully clear over coming weeks that the current effort is inadequate to deal with the huge hole in bank balance sheets.
Treasury Secretary Tim Geithner made a long speech Tuesday on bringing financial stability to the markets, remarkable for what was not in it--the Obama administration still is not ready to roll out a plan to rescue the nation's housing market and slow down the tidal wave of foreclosures.