During his press conference Monday evening, Barack Obama was asked a couple of questions that involved the twice delayed announcement of how Treasury was going to work with the second half of the TARP funds. Obama’s answer was that he didn’t want to steal Geithner’s thunder. He should have.
Dow futures were down about 40 points at the beginning of Obama’s press conference. By the end of his conference the Dow futures had dropped about 80 points. The decline in the futures came immediately following Obama’s refusal to steal the thunder.
Tuesday Geithner “let loose the thunder.” Remember, this was a plan that was twice delayed because the Obama administration wanted to “get it right the first time.” What Geithner layed out was little more than what could be generously called an outline. There were no details, no time frame, no identification of cost.
Geithner’s “plan” was met with a resounding thud by Wallstreet. What had started as a nervous day turned into a 400 point rout of the Dow.
Politicians were equally nonplussed by Geithner’s testimony. Senator John Kerry’ response:
"We need more details from Treasury on how exactly it plans to remove bad assets while protecting the taxpayer."
and Senator Bob Corker’s response:
“We’ve been here for three hours and 23 minutes and have no discernible idea as to how we’re gonna solve this problem.”
showed that there was disappointment with Geithner’s testimony across the political spectrum.
Corker went on to school Geithner on the problem of over promising and under delivering:
“I would think that the White House and you all communicate and last night the president said you would be very clear and there would be specific plans.
And today we lost probably a trillion dollars in the market as people looked for those very clear and specific plans and instead heard guidelines and some platitudes. I mean, I haven’t heard today what your commitment is to solving the problem.”
Wednesday, Geithner was back providing more testimony about his plan. Unfortunately, his testimony provided no more detail than the previous day:
"I completely understand the desire for details and commitments," Geithner told lawmakers today at the Senate Budget Committee in Washington.
In between the two Geithner appearances, President Obama realized he had a problem. He had either over promised Geithner, didn’t know what Geithner was going to say or thought that his aura would extend to Geithner’s testimony and protect him from serious questions. I suspect it was a combination of the three. In any event, during an interview with ABC’s Nightline Obama attempted to paint this as the chattering class not being smart enough to understand what he sees:
Well, you know, Wall Street, I think, is hoping for an easy out on this thing and there is no easy out. Essentially, what you’ve got are a set a banks that have not been as transparent as we need to be in terms of what their books look like.
And we’re going to have to hold out the Band-Aid a little bit and go ahead and just be clear about some of the losses that have been made because until we do that, we’re not going to be able to attract private capital into the marketplace. And so, you know, I think that you have two choices in this situation: You can prolong the agony and shareholders will be happy until they’re not happy, and that could be a year from now or two years from now, or, in the case of Japan, eight years later.
Or you can just go ahead and acknowledge that, yeah, there’s a lot of work that has to be done to put these banks back on a firmer footing.
Yeah, that’s right. After personally setting expectations for a detailed explanation, Obama is telling America that they shouldn’t have such high expectations, even if “The One” sets them.
After his appearance on Nightline, it was reported that Obama called Geithner and told him:
Uh, Timmy, uh, I know, uh, I’ve made a uh, political career, uh of being a constant um, campaign speech, uh providing uh, no specifics and um, accomplishing nothing measurable.
You’re uh, doin’ a heckuva job there, uh Timmy. But, there’s uh only room uh, for one uh, President at a time. Therefore uh, you’ll be uh, required to uh, provide details and specifics, uh, from here on out.
At least, that’s what I had heard.
