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February 11th, 2009

Geithner’s Speech Seen As a Failure

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Nearly 24 hours after Treasury Secretary Timothy Geithner delivered what was supposed to be the Obama Administration’s comprehensive “Financial Stability Plan,” the overall consensus among market analysts, economists, and the media alike was that the address was regarded as an overall failure.

The stock market’s reaction to Geithner’s speech yesterday (the Dow dropped nearly 400 points) reflected a serious let down, brought on by the market’s anticipation for a plan of action. Instead, what we all got was a reminder of each problem the economy is facing, without any detailed strategies to fix them. The days leading up to the speech distorted the marketplace by providing a false sense of anticipation that fully-formed plans were ready to be put in place immediately.

Perhaps the most specific measure Geithner discussed yesterday morning was the Fed’s Term Asset-Backed Lending Facility (TALF). Even that was nothing new — the program which still hasn’t begun, was announced last November. It comes as a great concern that the Treasury is willing to expand upon a plan of which no details have been released. There’s no proof that markets will even respond positively to such an initiative. Granted, recent Fed programs (like their $600 billion plan to but mortgage-backed securities) have provided certain markets with the most success.

Another disappointing factor was the administration’s lack of preparedness when it came to their housing rescue plan. For weeks now we’ve known that the Treasury is planning on allocating between $50 billion and $100 billion to such relief, but again Geithner left us hanging when he announced the housing rescue plan wouldn’t be unveiled for another couple weeks.

Some observers have asked, “Is Geithner in over his head?” Is the new administration unprepared, or did plans change at the last minute — leaving the Treasury Secretary with little details to reveal?

How would you rate the Treasury Secretary’s speech? What were you waiting for — and did you hear it?

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5 Responses to “Geithner’s Speech Seen As a Failure”

  1. Carina Says: February 11th, 2009 at 11:24 am

    Geithner’s speech was a complete let down. Aparently the government does not have a plan to rescue us the homeowners, the small business, the working man and woman, just more special pet projects for the good ole boys club!
    You need to get the interest rates down where people can refinance and stay in their homes and that will cause poeple to start buying which will create more jobs!! The banks will start hiring to refinace everyone and more homes will start selling again. Also get the illegals off the welfare system. That will save us Billions a year.
    I am available for Consultation President Obama!

  2. Tim Manni Says: February 11th, 2009 at 1:22 pm

    Carina,
    By now I believe we all think we could do a better job than those in Washington (yet again, who would want those jobs at a time like this?). Thanks for commenting. I completely agree — the speech was a let down. How long did it last, 15 minutes? I completely understand your frustrations with the lack of strategies announced for homeowners. We’ll have to wait another couple of weeks for that…

    What are your thoughts on the stimulus package? At least as of now, it seems to be more together than the supposed “Financial Stability Plan” we heard yesterday.

  3. The Man Without a Plan « Cynical Synapse Says: February 13th, 2009 at 6:07 pm

    [...] While neither Geithner’s speech nor Treasury’s “fact sheet” had anything of consequence, the stock market fell more than 380 points. Duh! As Simon Johnson said about Geithner’s remarks, “This is not a plan.” The end result is Geithner’s big speech was a failure! [...]

  4. Cynical Synapse Says: February 15th, 2009 at 9:56 pm

    Of course Geithner has no plan. He’s part of the financial establishment that created this whole debacle in the first place. This is a man who can’t even pay his own taxes. Obviously, he didn’t learn anything from his years at the IMF and the Federal Reserve. What kind of fiscal policy is making a speech and publishing a fact sheet with absolutely no tangible actions or objectives? It would have been better to say “I’m not done figuring it out yet.”

  5. Tim Manni Says: February 17th, 2009 at 11:31 am

    Cynical,

    Thanks for your comment as well as a link to our blog from your Geithner story — much appreciated. Your last sentence echos a sentiment that I’ve heard a lot. Stocks may have still tanked, but I think at least some market observers would have appreciated such honesty if he did come out and bluntly say ā€œIā€™m not done figuring it out yet.ā€

    The speech was far too anticipated for them to say nothing, or was it judging by the market’s strong reaction? I think the administration was counting on Geithner’s past experience, I just am hoping we haven’t seen it yet. For all of our sakes, let’s hope we will see it soon.

    Thanks,
    Tim

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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