Treasury Secretary Timothy Geithner today told lawmakers he is prepared to accept disappointment from legislators and the public until the details of a financial rescue plan are finalized.
“I completely understand the desire for details,” Mr. Geithner told members of the Senate Budget Committee in a question-and-answer session. “If that means there is going to be disappointment with the level of details until we get it right, I will live with that disappointment.”
The Treasury secretary on Tuesday unveiled a Financial Stability Plan, aimed at restoring the financial system to health, spur lending and revive the economy. Despite market rumors that the new plan would involve the creation of a “bad bank” to buy illiquid securities, Mr. Geithner made no such reference, which resulted in a 4.9% drop in the S&P 500 index. The market was rebounding today.
“We are going to do this carefully, consult carefully so that we don’t put ourselves in the position again where we’re laying out details ahead of the care and substance necessary to get it right,” Mr. Geithner said. His predecessor, Henry Paulson, first raised the possibility of the government buying “toxic” assets from banks in September but quickly abandoned the plan.
The new stability plan includes expanding to $1 trillion a Federal Reserve program to shore up asset-backed securities and a public-private investment fund, which proposes to help institutional investors buy illiquid assets. The plans do not require new money.
