February 10th, 2009
12:17 PM ET

Financial Dispatch: Bailout gets a reboot

Treasury Secretary Geithner announced the Obama administration's new financial stability plan Tuesday.

Treasury Secretary Geithner announced the Obama administration's new financial stability plan Tuesday.

Andrew Torgan
CNN Financial News Producer

Call it “TARP II.” Treasury Secretary Tim Geithner sketched out the broad strokes of the latest government attempt to stabilize the financial sector this morning.

Speaking appropriately in the Cash Room at the Treasury Department, Geithner introduced a four-point plan that aims to restart the flow of credit to businesses and consumers. The Obama Administration didn't put a price tag on the new plan – but said it won't ask Congress for more money, at least not right away.

The key points in the administration's new plan include:

– Testing the health of big banks to weather an even deeper economic downturn

– Making credit more available to consumers and businesses

– Creating a private-public partnership to take toxic assets off banks' balance sheets

– Addressing the housing crisis

Investors on Wall Street seemed far from impressed by Geithner's remarks. The Dow was down 230 points by the time the Treasury Secretary wrapped up his remarks and 300 points a few minutes later.

General Motors says it’s cutting 10,000 workers around the globe, or 14% of its salaried jobs worldwide. One third of those job losses will be in the United States. GM also said it will cut the pay of its remaining salaried workers in the U.S. beginning May 1. Executives will have their base pay reduced by 10% and many other employees will see pay cuts of 3% to 7%.

GM is by no means only company putting the brakes on salaries and pay raises. About one quarter of businesses have frozen workers' salaries for 2009 in the wake of the pessimistic economic outlook, according to a new survey.

Outsourcing and consulting firm Mercer says 25% of organizations surveyed say they have already decided not to raise their employees' pay, and another 20% are considering a salary freeze this year. One year ago, just 5% of companies planned to suspend raises. Mercer predicts that one in three companies will have frozen wages at 2008 levels by the end of 2009.

And gas continues to creep higher even though crude oil remains below $40 a barrel. Prices at the pump rose 4-tenths of a cent overnight to $1.928 a gallon. That’s the 13th consecutive increase. 10 states have regular unleaded gas prices of $2 and higher. 40 states and the District of Columbia have regular unleaded gas prices below $2. The highest gas prices are in Alaska ($2.517), while the cheapest gas prices are in Wyoming ($1.642).

Filed under: Andrew Torgan • Bailout Turmoil • Economy • Finance • Gas Prices • Oil
soundoff (9 Responses)
  1. Annie Kate

    I have read and re-read your comment several times now and I don't see a plan – just questions. They are good questions though.

    Geithner just announced his plans today; why is it that everyone is already acting like they won't work when they haven't even been put in force yet? Its not been a month since Obama was inaugurated. Does anyone reasonably expect there to be true and lasting change accomplished in less than a month? Many of you voted for Obama – give him a chance and the time to do what you voted for before you decide its the same old politics. This sort of stuff doesn't happen in the blink of an eye.

    February 10, 2009 at 8:00 pm |
  2. Luis

    can are official stop taking. Every time they talk about a new plan, their goes our markets heading south for the next 6 weeks of winter.

    February 10, 2009 at 5:54 pm |
  3. Mary

    Geithner, the man didn't pay his payroll taxes and we are supposed to just accept that he is smart enough for this position? I would like to know how much bad debt, not toxic assets, is related to the mortgage industry? Through all of this, I hear nothing of PMI and MIP, the insurances that are to pay for or reduce loan loses to banks. Here is my four point plan:

    1) How many bad loans were covered by mortgage insurance?
    2) How much money did the banks receive from PMI and MIP insurance payments?
    3) How many mortgage loans were 80 10 10 loans, in order to circumvent the mortgage insurance?
    4) How long will it take to get the books audited on banks wanting more money to determine the above?

    Isn't it ironic that the banks can turn us down for loans because of our high debt ratios, but are perfectly happy taking our tax dollars when the shoe is on the other foot? Lastly, why can't the banks restructure and take the responsibility themselves? I'm afraid that getting the bad debt off of the banks books translated, means putting it on the tax payers backs!

    February 10, 2009 at 4:35 pm |
  4. R Schneideman

    I hld no steed in Wall Street's negative reaction to the Treasury Initiative. They were one of the major contributors to the original problem and now 'the kettle is calling the pot black.' As Pres Obama said of Congress, a 'new mindset is required,' the same holds true of Wall Street. Give it a fair chance.

    February 10, 2009 at 4:18 pm |
  5. Michael - Los Angeles, CA

    I am not alone in expressing great disappointment in Mr. Geithner's proposals today regarding the use of the 2nd half of the TARP funds. I really expected more from what was a troubled cabinet choice vigorously supported by President Obama. In particular, not to have strict conditions on banks to make loans and thus get credit flowing again, as opposed to voluntary "incentives" to achieve this goal is particularly disappointing. This is NOT the change I had supported and expected from President Obama during his campaign.

    I really think it's time for a 2nd Boston Tea Party from all ordinary American patiots!

    February 10, 2009 at 3:44 pm |
  6. Christine

    When the camera's are off, when the lights is turned-off and when the White house door closes, the Washington officials must be singing "MONEY, MONEY, LOTS OF MONEY!!!" Yahoo. But I hope, we private citizens of this country will be able to sing the same song. Unfortunately, we will only get a 1 time rebate/stimulus. What will we do with a $1,000 perhaps - We know it is not enough to buy food, pay the bills and raise children for a month more so than a year.
    Unless we all line-up to the government and apply for jobs to improve the capital buildings or whatever government infrastructure jobs they intend to spend the stimulus/spending money.

    February 10, 2009 at 3:31 pm |
  7. ray

    One more plan that relies on the same people who caused the problem in the first place. Why don't I think the same inefficient, incompetent and some-times illegal bank heads won't help the country? Maybe, it's because we have already seen what they are capable of. We were told that we needed change and that was right and what I voted for. Where is it? Maybe if Geithner payed taxes he would appreciate what is being laid on the rest of us.

    February 10, 2009 at 1:36 pm |
  8. JC-Los Angeles

    It's the height of hypocrisy for Timothy Geithner, of tax evasion fame, to create a private/public ponzi scheme to take toxic mortgage fraud off banks balance sheets.

    With each egregious Greenspan rate cut, the mortgage fraud factories cranked up production and Wall Street cashed in; now little Timmy and his cronies want to cash in again?

    It's as if the connected few like little Timmy and his Wall Street colleagues didn't make enough money killing the US economy; now they want to get paid twice?

    The only thing more reprehensible would be if Timmy put Bernie Madoff in charge of his scam.

    Only in America.

    February 10, 2009 at 1:24 pm |
  9. Cindy

    So why don't they just add this new stimulus package, that'll they'll ask for eventually if not now, into the one they are working on now. I mean heck...they already have everything but the kitchen sink thrown in there so what's one more thing!?


    February 10, 2009 at 12:39 pm |