Geithner’s Speech Seen As a Failureby Tim Manni
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?