Tuesday, February 10, 2009

Geithner reveals... nothing?

News of late has been dragging its feet—being anticipated days and weeks ahead of its actual coming. This is a good thing when it comes to government spending—after all it seems sensible that bailout packages in the hundreds of billions should receive a healthy congressional debate rather than steamrolling it through based on fear tactics. So thumbs up to senate republicans for offering some minority opposition to Obama's stimulus proposal, a luxury democrats rarely saw from their representatives during the Bush administration.

As with the stimulus package, we've been awaiting a statement by new Secretary of the Treasury Timothy Geithner around continued bailouts of the banking industry. So far he has been non-commital around action—but talking trillions of dollars for expenses. Most famously has been proposed the "bad bank," where toxic assets can be taken off bank's balance sheets and backed by a taxpayer driven federal program.

As of his statement today, he remains diffuse, and was explicitly criticized by a Congressional hearing over that, and the DJIA trended down sharply in response. Whatever it is, he still has $320B of TARP money to work with, for now.

The fact he is calling for the use of private capital in all of this, for this "bad bank," which obviously isn't going to happen unless it is fully guaranteed, strikes me as almost a delay tactic.

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