Geithner Announces Bank Moves; Wall Street Sells Off

Wall Street considers this a sell out.  So they are selling off.

Treasury Secretary Timothy Geithner says the new administration will wage an aggressive two-front battle against the worst financial crisis in seven decades, while the Federal Reserve expands a key lending program to up to $1 trillion.

“Instead of catalyzing recovery, the financial system is working against recovery, and that’s the dangerous dynamic we need to change,” The Treasury Secretary said today.

The TARP will be renamed but all the details are sketchy.

But sketchy is good enough for a very wary Wall Street…..

Stocks are down as we approach 1 PM.

“Our challenge is much greater today because the American people have lost faith in the leaders of our financial institutions, and are skeptical that their government has — to this point — used taxpayers’ money in ways that will benefit them,” Geithner said.

From CNBC:

US stocks fell sharply Tuesday in a broad-based decline as the government announced details of its latest bailout plan.

The Dow Jones Industrial Average was down about 70 points, then lost another 100 in a matter of minutes — before even any official government announcement.

Stocks continued to slide as Treasury Secretary Tim Geither revealed details of the bank-bailout plan, after a one-day delay. CNBC will interview Geithner after his speech, at noon. Then he’s on to Capitol Hill, where he will testify before a House panel.

The “Financial Stability Plan,” as it’s now called, consists of four main components:

1) It will set up a public-private fund to mop up $500 billion of spoiled bank assets.

2) It will set up a consumer-lending facility that will “leverage up to $1 trillion.”

3) It will devote $50 billion to stem home foreclosures.

4) It will provide new funding to banks after a stress test to determine if the bank is healthy.

Some market watchers remain skeptical over the benefits of the plan and legendary investor Jim Rogers told CNBC it could even make things worse. The bailout will plunge the US further into debt and it is designed by the same people who failed to forecast the crisis in the first place, Rogers said.

CNBC:
http://www.cnbc.com/id/29119665

********************************

Geithnner Speech Highlights

WASHINGTON (Reuters) – The following are excerpts from a speech U.S. Treasury Secretary Timothy Geithner will deliver on financial stability at 11 a.m. EST.

“As President Obama said in his inaugural address, our economic strength is derived from ‘the doers, the makers of things.’

“The innovators who create and expand enterprises.

“The workers who provide life to companies and, with their earnings, support families and invest in their future… This is what drives economic growth.

“The financial system is central to this process, transforming the earnings and savings of American workers into the loans that finance a first home, a new car or a college education, the credit necessary to build a company around a new idea.

“Without credit, economies cannot grow, and right now, critical parts of our financial system are damaged.

…..

“Instead of catalyzing recovery, the financial system is working against recovery, and that’s the dangerous dynamic we need to change.

“It is essential for every American to understand that the battle for economic recovery must be fought on two fronts. We have to both jump-start job creation and private investment, and we must get credit flowing again to businesses and families.

Raed the rest:
http://www.reuters.com/article/ou
siv/idUSTRE5194C920090210?sp=true

Related:

Federal Government Takes Over American Life

http://michellemalkin.com/2009/02/10/b
ohica-here-comes-2-trillion-tarp-ii/

Timothy Geithner
Photo: AP

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