Another 1.5 Trillion Update says 2 Trillion ..Bailout Coming On the Heels of Porkulus!

US unveils new $1.5 trillion plan
US Treasury Secretary Timothy Geithner has unveiled a comprehensive $1.5 trillion (£1.02 trillion) bank bail-out plan to beat the financial crisis.
BBC
Under the plan, the size of a key Federal Reserve lending program will be expanded to $1 trillion from $200bn.
In addition, a public-private investment fund of $500bn will be created to absorb banks’ toxic assets and could be expanded to $1 trillion.

“Critical parts of our financial system are damaged,” Mr Geithner said.

“Instead of catalyzing recovery, the financial system is working against recovery, and that’s the dangerous dynamic we need to change,” he added.

The new plan is aimed at restoring confidence in the damaged financial system and restarting bank lending.
The key question now is how eager the private sector will be to participate both in the new investment fund and the new Federal Reserve lending programme.
Meanwhile, the US Senate has backed an $838bn economic stimulus package which will now have to be reconciled with the House of Representatives version.
Transparency and accountability
Mr Geithner said the new plan should unfreeze the credit market, strengthen banks and “provide critical aid for homeowners and for small businesses”.

“And as we do each of these things, we will impose new higher standards for transparency and accountability,” he added.

He said that the public-private investment fund to buy up risky assets will be seeded with government money.
The expanded Federal Reserve lending program will support lending to small businesses and consumers, including credit card lending and student loans, and also cover the troubled commercial real estate market.
The government also will give banks access to additional capital from the Treasury’s original $700bn bail-out fund “as a bridge to private capital”.
But that will come with strict terms, including full disclosure and limits on executive pay.

“This assistance will come with terms that should encourage the institutions to replace public assistance with private capital as soon as that is possible,” said Mr Geithner.

The government will also provide $50bn to try to soften the deep housing crisis, which has been having a negative impact on the economy.

And this…………….
Stocks tumble after gov’t unveils financial plan
Yahoo news
NEW YORK – Investors are frustrated with the government’s latest bank bailout plan — and showing it by unloading stocks.
The major stock indexes fell more than 4 percent Tuesday, including the Dow Jones industrial average, which tumbled 382 points. Financial stocks led the market lower, a sign of how concerned Wall Street is about the government’s ability to restore the health of the banking industry.
Traders and investors said the lack of specifics from Treasury Secretary Timothy Geithner on how the government will direct more than $1 trillion in public and private support was troubling.
The plan is aimed at restoring proper functioning to credit markets, which seized up over worries about bad debt after the September bankruptcy of Lehman Brothers Holdings Inc. The latest plan calls for a government-private sector partnership to help remove banks’ soured assets from their books. It would also boost an effort to unclog the credit markets that govern loans to consumers and businesses.

“The good news is they are going to spend a trillion dollars, the bad news is they don’t know how,” said James Cox, managing partner at Harris Financial Group.

Geithner’s speech “basically puts a spotlight on the fact that the government has no idea how to fix the problem,” said Jeff Buetow, senior portfolio manager at Portfolio Management Consultants. “People bought on rumor and hope, and now they’re selling on reality.”

Wild Thing’s comment……….
A trillion here, a trillion there, pretty soon you’re talking REAL money.
Let’s see:
* almost 1 trillion first time TARP
* 1 trillion stimulus – Senate voted on today
* 1.5 trillion second bailout
3.5 trillion spent and they haven’t even dealt with the budget yet.
BUT wait ia minute this is growing like Jack and the Beanstalk …look at this : ( this is making me dizzy) And, if it can’t get worse, there is talk about a Porkulus part two, which should hit the House in the Summer. This second Porkulus could be anywhere between 500 billion and 1 trillion dollars.
Geithner Says Bank-Rescue Plans May Reach $2 Trillion (Update3)
Bloomberg.com
Treasury Secretary Timothy Geithner pledged government financing for as much as $2 trillion of efforts to spur new lending and address banks’ toxic assets, seeking to end the credit crunch hobbling the economy.
“Instead of catalyzing recovery, the financial system is working against recovery,” Geithner said in unveiling the Obama administration’s financial-bailout overhaul in Washington today. “At the same time, the recession is putting greater pressure on banks. This is a dangerous dynamic, and we need to arrest it.”
Stocks slumped, led by financial shares, as investors expressed concern about a lack of specifics on plans for addressing the distressed assets choking banks’ balance sheets. Geithner warned today that it will “take time” for the administration’s strategy to bear fruit.
The main components of the Treasury’s package today are a joint public- and private-sector fund to buy as much as $1 trillion of illiquid assets and a $1 trillion program to supply new credit to consumers and businesses. The administration also will inject additional taxpayer funds into banks, imposing tighter restrictions that will include limits on dividend payments, acquisitions and executive pay.
“I want to be candid: this strategy will cost money, involve risk, and take time,” Geithner said today.