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February 10, 2009

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Today the new Treasury Secretary Timothy Geithner outlined a plan to “restore stability to our financial system”. The speech and its contents are on a new website at .  I seriously thought that it was a joke, and here is why.

First of all, the cost of the plan is up to $2 trillion.  To borrow a quote  from Senate Minority Leader Mitch McConnell, “if you started the day Jesus Christ was born and spent $1 million every day since then, you still wouldn’t have spent $1 trillion.”  Senator McConnell was speaking about the huge bloated stimulus bill, and now Geithner proposes a plan that costs 2 to 3 times of that monstrosity.  I have no idea how this is possible.

Second, the new administration is heralding Geithner’s plan as a completely new idea.  If you drill down into the fact sheet and read what he plans to do, then you will see that it is not so different from Paulson’s rhetoric of buying up bad bank assets.  They did add initiatives to drive more consumer and business lending, but the method is the same as before.  Basically, they want to provide more capital to the banks. After billions of dollars already injected into the nations largest banks, they are still doing business as usual and actually making more profit than ever since they are borrowing at the lowest costs in decades and lending out at similar rates as before.  The banks are doing just fine, and I doubt that giving them more money will compel them to lend at better terms to consumers.  They will just profit further because that is the goal of a bank.

Finally, there is more language about preventing “avoidable foreclosures”.  I am not sure if Geithner read .  One of the biggest problems facing the entire country right now is the rising unemployment rate, and that is fueling more foreclosures.  There is no point in trying to prevent these foreclosures through loan modification because what people need are sources of income.

Obviously,  I am not the only one who has no confidence in this plan because the stock market took a huge dip today.  Perhaps the Treasury should change their website’s name from to because that would at least instill some panic into people’s hearts just like how Obama is campaigning for the stimulus bill by using the ““.

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