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Financial Stability Plan: What is Timothy Geithner new bank rescue plan?

By Amarendra Bhushan for CEOWORLD Magazine Updated:February 11, 2009

I don’t know how the private-public partnership will work. But it does look like for the ‘bad bank’ the losses will mostly be suffered by taxpayers, and gains will mainly be by plutocrats.

The new plan might be a rerun of the Bush administration’s management of the first $350 billion that Congress authorized last year for the so-called Troubled Assets Relief Program, or TARP.

The market may have been disappointed that there wasn’t more detail. But the efficacy of the plan will probably lie largely in the quality of its execution: how much money gets put to work, how fast, and in what ways.

- New program that combines public and private capital.
- Fund .will buy troubled assets of up to $1 trillion.
- The joint public- and private-sector fund is one of the main components of the government’s effort.
- With total as much as $2 trillion.
- Timothy Geithner renamed the second $350 billion of TARP as the Financial Stability Plan.
- Dow Jones industrial average was down nearly 400 points on the day — posting the worst one-day percentage drop since December 1.

Some some elements still rmain unclear, exactly how the Obama government would entice investors to participate in the private bank and how the assets would be priced.

Timothy F. Geithner

Timothy F. Geithner became the ninth president and chief executive officer of the Federal Reserve Bank of New York on November 17, 2003. In that capacity, he serves as the vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation’s monetary policy. President Obama nominated Mr. Geithner to be the 75th Secretary of the Treasury and the U.S. Senate confirmed him to the position on January 26, 2009.

Mr. Geithner joined the Department of Treasury in 1988 and worked in three administrations for five Secretaries of the Treasury in a variety of positions. He served as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Secretaries Robert Rubin and Lawrence Summers.

He was director of the Policy Development and Review Department at the International Monetary Fund from 2001 until 2003. Before joining the Treasury, Mr. Geithner worked for Kissinger Associates, Inc.

Mr. Geithner graduated from Dartmouth College with a bachelor’s degree in government and Asian studies in 1983 and from the Johns Hopkins School of Advanced International Studies with a master’s in International Economics and East Asian Studies in 1985. He has studied Japanese and Chinese and has lived in East Africa, India, Thailand, China, and Japan.

Mr. Geithner serves as chairman of the G-10’s Committee on Payment and Settlement Systems of the Bank for International Settlements. He is a member of the Council on Foreign Relations and the Group of Thirty.

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