Wednesday, February 11, 2009

TARP-2, Part 2

So it seems the long awaited TARP-2, unveiled yesterday by Treasury Secretary Timothy Geithner, was not a hit with Wall Street (and perhaps most Americans). The problem for Wall Street was that there were few details given about the specifics of the plan. What Wall Street and the stock markets hate more than anything is uncertainty. There are 2 things that can cause the markets to have a bad day (and yesterday was a VERY bad day), unexpected bad news and uncertainty. So even though Mr. Geithner announced the new TARP-2 plan and was briefed by Congress for about 3 hours. Somehow he failed to disclose enough details on exactly how the plan would work to give everyone listening a warm and fuzzy feeling. Today should be equally interesting, as a parade of Big Bank CEO's come to Washington (not by private jet) to give their take on the bailout and proposed stimulus package. The Congress and Senate still have to work out their compromise of their stimulus packages so that a final bill can go to President Obama for his signature. Maybe we should rename TARP for what it really is. Currently it's called the Troubled Asset Relief Program, or TARP for short. But I think it should be called TLBP, or the Terrible Liability Buyback Program. Because these bad mortgages aren't troubled, they're terrible. They aren't really assets, they're liabilities. They won't bring relief to taxpayers, it's a buyback for the banks. And it still is a government program which makes everyone nervous. President Obama is putting all his cards on the table on this one!

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