Dustin Weighs In On Treas. Secretary Geithner

Treasury Secretary Geithner Lays an EGG on TARP ll

In Mr. Geithner’s highly publicized speech on his plan for the second half of TARP ll, Mr. Geithner missed the mark. Wall St. and Main St. alike were anticipating a well thought out plan that he had been working on for the last two and a half months. In reality there was no detail at all. There was just a lot of the same words he's been talking lately about acting boldly and swiftly without a plan to back that up. It is put up or shut up time for the Mr. Geithner. I think this was his chance to restore confidence back in the US Treasury and he failed in a big way. It’s early on in his term, but he’s had time to act swiftly. Let’s hope he puts in the hours that the former Secretary Paulson put in to get us some details soon.

The plan so far doesn’t tackle the issue of how to get the toxic assets off banks’ books so they’ll start lending again. Here are the questions I was hoping to get answered during the speech and hope will get answered soon.
- Will banks be nationalized?
- What key metrics will be addressed in this reported “stress test”?
- Will there be a ring fencing of assets?
- What effects will additional monetary assistance have on the ability to declare optional dividend payments?
- How does the Treasury plan to partner with the private sector to create a conduit to transfer assets?
- Will there be incentive for the institutions to sell assets which are deemed distressed?
- How will a pricing mechanism for these non-marketable assets be determined?
- What other elements will help stabilize the various asset classes leading to write downs? (i.e. residential and commercial real estate, as well as consumer credit among others)
- Will market to market accounting be suspended?

I will keep you updated as information leaks out on this subject. To me, this is the most important thing that needs addressing before we can start to heal our battered economy. Until we get some direction and clarity in this plan, the stock markets and economy will continue to be difficult. Every day that goes by without a solution will create more and more job losses. Stay tuned.
DUSTIN PADGETT