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Lack Of TARP-2 Details Pushes Dow Down

MELISSA BLOCK, Host:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block. It was eagerly anticipated, but when the Treasury secretary finally unveiled a new financial stability plan today, the disappointment was palpable. Stocks were down across board. The Dow fell more than 380 points. The plan for the second half of the old TARP program - the $700 billion appropriated by Congress - was short on details in some critical areas, as NPR's John Ydstie reports.

JOHN YDSTIE: The Obama administration was eager to leave behind the controversies that surrounded the Bush administration's handling of the first $350 billion in TARP funding. This morning, as he unveiled the new approach, Treasury Secretary Timothy Geithner criticized the previous administration's response as late, inadequate, and damaging to public confidence. And Geithner promised a new direction.

BLOCK: To get credit flowing again, to restore confidence in our markets, and to restore the faith of the American people, we are going to fundamentally reshape our program to repair the financial system.

YDSTIE: But two of the four main parts of the program build upon efforts begun by the Bush administration. The first involves the continuing effort to stabilize banks by providing government injections of capital, if necessary. Geithner said that will be preceded this time by an exhaustive government examination of the banks.

BLOCK: We're going to require banking institutions to go through a carefully designed, comprehensive stress test. This borrows the medical term. We want their balance sheets cleaner and stronger. And we're going to help this process by providing a new program of capital support for those institutions that need it.

YDSTIE: But in the areas where the Obama administration will differ from the Bush-era TARP, the details are sketchy. In fact, details on the approach to helping homeowners avoid foreclosure have been delayed for several weeks. And the plan for handling toxic assets - those mortgage-backed securities that are dragging banks down - is a little more than a concept. Geithner said the government would partner with the private sector to encourage investors to buy the troubled assets, but it wasn't clear what form the partnership would take, or whether the government would need to provide insurance against losses, to lure private money into the game. In an interview after his speech on the financial network CNBC, Geithner was questioned about the lack of detail.

U: Have you made those choices yet?

BLOCK: Steve, we're going to be very careful to get this right. And we're not going to put out details until we are confident that we've got the right structure that's going to achieve these objectives - to try and bring private capital in alongside government financing to help get these markets working again. As you know better than anybody, this is enormously complicated.

YDSTIE: John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.
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