Geithner Faces Scrutiny On The Hill
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Treasury Secretary Timothy Geithner got a second chance to explain his financial rescue plan on Capitol Hill today. His first effort yesterday was widely criticized as too vague, and the stock market responded with a sharp sell-off. There was no repeat of that today - in fact stocks gained a little ground. But there's still little detail on how the plan might work. NPR's Scott Horsley reports.
SCOTT HORSLEY: Alabama Senator Jeff Sessions put it bluntly today when the treasury secretary appeared before the Senate Budget Committee. The initial reviews of his financial plan were not good.
Senator JEFF SESSIONS (Republican, Alabama): Many of us were looking forward to a plan that could be presented in a straightforward, clear and detailed way. Unfortunately, did not what we received yesterday.
HORSLEY: Sessions said he hoped Geithner would use today's hearing to put some meat on the bones. But after two hours of questions, the secretary's rescue plan remained in skeletal form. The government does plan to inject more money in the banks, and expand its effort with the Federal Reserve to promote consumer lending. But a plan to relieve banks of their toxic assets, with a combination of public and private money, is still little more than an outline. And Geithner says that's by design.
Secretary TIMOTHY GEITHNER (Treasury Department): I do not want to compound the mistakes of the last 12 months where things were rushed out before they were ready. And if that means there is going to be disappointment with the level of detail until we get it right, I will live with that disappointment because it is better than the alternative.
HORSLEY: Some observers say the new administration simply doesn't have the staff yet to fill in the blanks. Geithner, himself, has been in office for barely two weeks. But before that, he served as president of the New York Federal Reserve Bank, where he was intimately involved in efforts to prop up the financial system. Global Insight economist Brian Bethune says given that background, financial players were counting on Geithner to hit the ground running.
Mr. BRIAN BETHUNE (Economist, Global Insight): You know, this is not something that we can just, you know, deliberate over for weeks. There is a burning platform out there. There still is severe pressure on the banking system, credit is still extremely tight. And there's just no way that this recovery can take place unless this problem is fixed.
HORSLEY: Geithner is a talented technocrat. But as treasury secretary, he's now speaking to a wider audience than just the financial markets. And Bethune thinks that may have cost him. He suspects the administration knew the bailout was already unpopular, and worry that more detail would just make matters worse.
Mr. BETHUNE: I think what they want to avoid is getting into a political backlash, to some extent. I think that was the trade-off that was made. But, unfortunately, they have now paid a price in terms of the credibility of the program.
HORSLEY: White House spokesman Robert Gibbs was pressed to defend the Treasury plan today as ready for roll out. He said the plan would be refined in consultation with lawmakers and the private sector, and argued it should not be judged by one day's market reaction.
Mr. ROBERT GIBBS (Press Secretary, White House): I think we can all go back in both recent and not so recent history, and see that one day announcements have provided positive changes in the market for plans that, ultimately, turned out to be unsuccessful, just as negative reactions have sometimes been at the forefront of plans that worked.
HORSLEY: Members of the budget committee, who heard from Geithner today, were most interested in finding out how much it will cost to shore up the banking system and get credit flowing again. Geithner said he'd be moving very quickly in the next several weeks to flush out the plan. That would provide a sense of how the government will use the $350 billion already available, as well as an early indication of how much more taxpayer money might be needed.
Scott Horsley, NPR News, Washington.