WaPo: Geithner plan was incomplete
By mw | Related entries in Bailouts, Economy, MoneyFollowing up our discussion last week on why the much heralded Geithner plan was received so poorly by the markets.
“According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers.
They needed an alternative and found it in a previously considered initiative to pair private investments and public loans to try to buy the risky assets and take them off the books of banks. There was one problem: They didn’t have enough time to work out many details or consult with others before the plan was supposed to be unveiled.
The sharp course change was one of the key reasons why Geithner’s plan — his first major policy initiative as Treasury secretary — landed with such a thud last Tuesday. Lawmakers, investors and analysts expressed dismay over the lack of specifics. Markets tanked, and fresh doubts arose about the hand now steering the country’s financial policy.
Public acceptance of the plan suffered from several missteps, said sources involved in the decision-making or in close contact with those who were.
The Obama administration, they said, failed to rein in the grand expectations built for the plan on Wall Street and in Washington, concluding that they would rather disappoint the markets with vagueness than lay out a lot of details they might have to change later…”
They won’t make the same mistake twice. Whenever the fully fleshed out plan is unveiled, I expect it will be to a positive market reaction. Last week there was a big buildup, fueling high expectations and the plan (or lack thereof) disappointed. Now, just a detailed and complete plan will exceed expectations – regardless of content.
This entry was posted on Tuesday, February 17th, 2009 and is filed under Bailouts, Economy, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
February 17th, 2009 at 5:16 pm
Absolutely, I think?
At first, I was most impressed with the fact that, hey, the Markets do matter after all! When Wall St. reacted so badly to the news (or lack of informative news) by selling off so badly, many asked who cares about what Wall St. thinks? They’ve been so wrong leading up to this, they’re the one’s responsible for much of the problem in the first place… Well, this article, and it seams spot on, certainly shows that Wall St. knows what it’s looking for and that Guithner plan wasn’t it!! There should be no excuses for the Administration to not deliver a plan when they promised one.
The other thing that struck me is that there’s still time to get this thing right and begin the fix. That was shown by the way they didn’t panic or lie about what went down, they did the Gov speak thing and talked, talked, talked, and said nothing and this time it might of been the prudent thing to do!
February 17th, 2009 at 8:05 pm
Hey, where’s the 17,000 to Afghanistan story?