The early verdict on the Geithner plan: Too little, too little.
Markets are down, having had an adverse reaction to Treasury Secretary Tim Geithner’s presentation detailing the Obama Administration’s plan to pull the financial system out of its current morass, which many say is still too light on specifics. Certain facets of the plan resemble those that were entertained in the previous administration — with the exception of a stress-testing mechanism to determine which financial firms need assistance.
Some of the decline can potentially be attributed to the market selling the news. And one cannot help but think that expectations were probably a bit too high, even after various newspaper reports seemed to suggest that the administration was trying to soft-pedal investor hopes for a grand re-think.
Still, interviews with market participants suggest disappointment that the plans don’t go further in terms of detailing how the Treasury will move from Point A to Point B. The chief problem as many see it is that the speech, coupled with other leaked reports about the plans, is one long preamble — lots of references to intentions, being “prepared to commit,” and other lofty statements of purpose. It’s not
“Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets,” Mr. Geithner said. “We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it.” The Chicago Board Options Volatility Index rose to 47.15 on the day, up 8%. Read more..
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