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And I'm Renee Montagne. The Obama administration is set to roll out its long- awaited plan to cleanse the financial system of toxic assets. Those bad mortgages and securities produced the credit crisis that's taken up much of the world into a deep recession. Administration officials say they want the federal government to work with private investors to buy up those toxic assets. This, as Congress is moving to punish Wall Street executives who've been given hefty bonuses.
The House has voted a 90 percent tax on large bonuses handed out at companies receiving government bailouts. Joining us to talk about all of this is NPR's Tom Gjelten. Good morning.
TOM GJELTEN: Good morning, Renee.
MONTAGNE: Let's begin with the new plan to deal with the toxic assets. What can you tell us about that?
GJELTEN: Well, Renee, basically it's an effort to create a market for those assets, those big bundles of bad mortgages. We haven't had that until now, largely because people haven't had any idea what those assets are worth. There was no way to put a price on them. The market was just frozen because banks didn't want to give them away, but buyers, on the other hand, worried they would pay too much for them. That's been the key problem. So what the government here is trying to do is get a market started in these securities with private investors bidding on the assets.
The program actually has three parts to it, but the plan is essentially to take some of the risk out. The government will put up a lot of the money in partnership with these investors and it'll also guarantee against a big portion of the potential losses that investors could face. And the hope is that maybe this way you could actually kick-start the market, just get some bidding going, actually see some of these assets purchased and thereby get some prices attached to them. So we'll have an idea what they're actually worth.
The government couldn't establish this market just by buying them on its own, Renee, because there wouldn't be any competition, the price would be just arbitrary. But private investors weren't doing it on their own, because it seemed too risky, maybe with this public/private partnership, we could actually see buying and selling and get these assets finally off the banks' balance sheets.
MONTAGNE: Does the private sector seem to like this idea?
GJELTEN: Well, initially, yes. However, you mentioned this tax that Congress is considering on bonuses and that has somewhat complicated things. We've already had some Wall Street folks saying they're not inclined to sign up as investment partners with the government if there's a possibility that Congress might decide down the road to change the rules, and let's say, tax any profits that come out of this venture.
And the administration is actually a little bit worried about this right now. President Obama was asked about this new bonus tax proposal last night in an interview with "60 Minutes." He chose his words really carefully, saying he understood where Congress was coming from on this. Let's take a listen.
BARACK OBAMA: We can't govern out of anger. We've got to try to make good decisions based on the facts, in order to put people back to work, to get credit flowing again.
MONTAGNE: So the president seems to be throwing some cold water on this move by Congress. What do you think? Will he actually veto this legislation if it passes, it has to go through the Senate, of course?
GJELTEN: It has to go through the Senate, Renee. He wouldn't say, other members of the administration wouldn't say, but it is pretty clear that they don't like it. In that interview, President Obama actually hinted that this tax could be unconstitutional. He said you don't want to use the tax code to punish people. On the other hand, he also said that Wall Street needs to understand it can't just take government bailouts and then go on doing business as usual.
It appears, Renee, that the administration is trying to distinguish right now between good executives and bad executives. The bad guys are these executives who are a burden on the taxpayer because their companies are getting big bailouts. The good guys are the executives who are more responsible and willing to partner with the government to get the economy rolling again. Christina Romer, the chair of the president's Council of Economic Advisors mentioned this distinction yesterday on FOX News. Let's listen to that cut.
CHRISTINA ROMER: What we're talking about now are private firms that are kind of doing us a favor, right? Coming into this market to help us buy these toxic assets off banks' balance sheets. And I think they understand that the president realizes they're in a different category. They are firms that are being the good guys here to try to help us get these toxic assets off banks' balance sheets.
GJELTEN: So, Renee, I think her message is that you help us and we'll protect you from Congress.
MONTAGNE: Right, and of course, talking about those guys being good guys, that may be a hard sell in this environment. And we certainly heard a lot of angry talk from both Democrats and Republicans on the Sunday talk shows. Is Congress in much of a mood to cooperate with President Obama?
GJELTEN: That's really unclear right now. Among Republicans and Democrats alike, there's a lot of anger about these bailouts and there still is this determination to punish somebody. Republicans, on the other hand, are also very angry about the big $1.8 trillion deficit. So a lot of folks are very nervous.
MONTAGNE: Well, just very quickly, Treasury Secretary Timothy Geithner, he'll introduce this plan this morning. What about him? He's coming for a lot of criticism.
GJELTEN: He has, as you say, he's going to present this recovery plan today. He'll be up in Capitol Hill a couple of times this week. He's been criticized a lot, but President Obama in that "60 Minutes" interview stood behind him all the way, even said, Renee, that he wouldn't accept Tim Geithner's resignation even if it was offered.
MONTAGNE: Tom, thanks very much.
GJELTEN: Thank you, Renee.
MONTAGNE: NPR's Tom Gjelten.
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