Wall Street Snubs Treasury Plan

President Obama was tight-lipped about Treasury Secretary Tim Geithner's bailout plan during last night's press conference, deferring to Tuesday's unveiling of a plan that would resurrect the failing U.S. financial markets. Well, Wall Street took one whiff of Geithner's plan and then covered their noses... it was that bad! By the end of the day, the Dow Jones Average had tumbled more than $380 and the Nasdaq lost over 4 percent.

Geithner outlined the administration's plan to restart frozen credit markets and bolster the health of troubled banks. He said the economy will recover from its swoon only with the help of healthy financial institutions. But critics said the Obama administration's plan is neither well-funded enough to recapitalize troubled banks, nor detailed enough to assure investors that the government can solve the toxic asset problem plaguing banks. They say a key a key shortcoming of the Geithner plan is that it lacks the funding necessary to fully recapitalize troubled banks. The Treasury has $320 billion available under the Troubled Asset Relief Program, but the administration said it won't ask Congress for additional money at the current time.

What's more, the four-point plan Geithner rolled out Tuesday earmarks $50 billion for foreclosure relief, $50 billion for a private-public toxic asset-removal partnership and grants as much as $100 billion to a plan to restart markets for securities backed by consumer loans.

That leaves around $120 billion in the Treasury kitty for bolstering the capital of banks - which, observers say, would barely be enough to recapitalize one troubled giant institution, let alone a roomful.

One chief economist said, "$120 billion isn't even walking-around money in a financial crisis."

He said the government should be prepared to spend at least $1 trillion to recapitalize troubled financial institutions - and that it should demand that the recipients take appropriate action in return, such as changing management, reconstituting their boards and selling assets. The Paulson Treasury didn't exact any action from the banks, and the Geithner Plan doesn't include any either... it's like the bankers are untouchable.

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plez sez: this isn't a good showing from the Obama Administration. everyday people are not going to feel better about the bailouts and the stimulus packages until those who are responsible for this mess are held accountable. the TARP fund needs to be increased and access to those funds must come with serious strings attached.

we are watching as wall street slowly pisses away one trillion dollars while snubbing its collective noses at Obama... he inherited a mess and unfortunately, it's his responsibility to fix it!

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Read the CNN Money article about Wall Street's reaction to Geithner's Plan.

Read the Forbes article about Wall Street woes over Geithner's plan.

Read the New York Times article about some banks are planning to give the bailout money back.

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