Geithner Gets Boost From Reaction To Treasury Plan
ROBERT SIEGEL, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
With everything the Obama administration has tried to arrest the economic downturn, there's been no plan to deal with the bad mortgage debt at the center of the crises, until today. Now we have new details on the White House plan to remove so-called toxic assets from bank balance sheets, in an effort to get credit flowing again. The stock market appeared to welcome the plan. The Dow jumped nearly 500 points, though everyone's not thrilled. We'll hear from naysayer Paul Krugman in a few minutes.
But first, the story of one man who's political stock hangs in the balance: embattled Treasury Secretary Timothy Geithner. NPR's Scott Horsley reports.
SCOTT HORSLEY: This is Secretary Geithner's second chance to roll out a bank rescue plan. This time, there were more details and fewer cameras and - at least for now - a more positive result. Last month, Geithner stood, blinking into a teleprompter in front of a crowded auditorium, as he offered only a sketchy framework of how the government planned to proceed. That rattled Wall Street and triggered a massive selloff in the stock market.
This time, Geithner met privately with a group of reporters. No recording was allowed. And later, when it came time to address the microphones, it was President Obama who did the talking.
President BARACK OBAMA: This is one more element that is going to be absolutely critical in getting credit flowing again. It's not going to happen overnight. There's still great fragility in the financial systems, but we think that we are moving in the right direction.
HORSLEY: That direction is a partnership between the federal government and private investors to buy toxic assets from banks. The government will put up most of the money in the form of loans or direct investment, but the private investors will put up some of their own cash. And they'll decide how much to pay for the assets. The administration sees that private role in pricing the assets as a key advantage of this approach. If investors pay too much, their own money is at risk, along with the government's. And if they get a bargain, taxpayers will share in the profits. Either way, Mr. Obama says banks will be freer to lend money once the toxic assets are off their books.
Pres. OBAMA: The good news is that we have one more critical element in our recovery, but we've still got a long way to go and we've got a lot of work to do. But I am very confident with the team that we've got assembled, we're going to be able to make it happen.
HORSLEY: As he spoke, Mr. Obama was surrounded by his economic team, with Geithner at his right. Geithner came under renewed attack last week for not blocking the bonuses paid executives at the troubled AIG Insurance Company. Florida Congressman Connie Mack went so far as to call for the secretary's resignation, telling CNN the American people have lost confidence in Geithner.
Representative CONNIE MACK (Republican, Florida): And the president now having to come to his rescue and hold his hand, you would rather have someone in who can stand on his own two feet and navigate this economy to a growing economy. And we're just not seeing that right now.
HORSLEY: The president, however, says he has complete confidence in Geithner. Mr. Obama told CBS's "60 Minutes" he would not accept the secretary's resignation, even if it were offered. In order to get private investors to participate in the rescue plan, Geithner says the government has decided not to limit their compensation should their bets pay off. Mr. Obama suggests some big payouts may be the price that angry taxpayers have to pay in order to get credit moving again.
Scott Horsley, NPR News, the White House.