Wall Street to Geithner: Where are the details, man?
Wall Street thought it would get some hard details today on the next phase of the Obama administration's financial-system rescue.
Investors’ reaction: a big no-confidence vote. The Dow Jones industrial average fell as much as 317 points after Geithner’s comments and, just before 10 a.m PST, still was off 262 points, or 3.2%, to 8,008. UPDATE: The Dow closed down 381.99 points, or 4.6%, to 7,888.88.
That lack of confidence also was evident in a jump in the price of gold, the classic refuge for the fearful. Near-term gold futures were up $21 to $913.80 an ounce in New York.
Geither "said nothing," said Dan McMahon, head of equity trading at brokerage Raymond James & Associates in New York. "There was not nearly enough clarity or details."
Wall Street’s frustration is that the administration had stoked expectations for Geithner’s speech for the last week. Investors believed they’d get details, particularly on a plan to get toxic loans off banks’ books.
But Geithner didn’t go much beyond the basic concept that had already leaked out over the weekend -- that the government would seek to join with private investors to devise a plan for purchasing and resolving rotting assets.
Nor did he provide any more specifics on the administration’s promise to help financially strapped homeowners.
Where are the details?
"This thing is very hard to get right," Geithner said in an interview on CNBC after his speech.
Investors’ response is: Yeah, we know that. But you led us to believe that you were close to getting it right.
Tony Crescenzi, bond market strategist at Miller, Tabak & Co., put it this way in an e-mail:
In revealing his Financial Stability Plan, Geithner spoke in plain terms, catering more to Main Street than to Wall Street, clearly showing the fear that exists within Washington over the use of taxpayer money. Didn't President Obama speak to Main Street last night? The problem is that Geithner needed to speak more to Wall Street, where the problems lie, rather than stay at a distance as he did, and leave Wall Street with too few details with no roadmap by how it might find its way out of current difficulties.
-- Tom Petruno
Photo: Treasury Secretary Timothy Geithner before his speech today. Credit: Matthew Cavanaugh / EPA