How could Geithner’s much-vaunted financial rescue plan have been so stunningly vague on arrival, given the amount of time he’d worked on it? The Washington Post reveals that in fact he’d only been working seriously on it for less than a week: it’s Plan B, and he only dropped Plan A at the last minute.
Just days before Treasury Secretary Timothy F. Geithner was scheduled to lay out his much-anticipated plan to deal with the toxic assets imperiling the financial system, he and his team made a sudden about-face.
According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers.
Well, that explains quite a lot, I suppose. But the fact is that any Plan B, with details-to-be-ironed-out-later, is going to look better than any Plan A, with its plethora of devils in the details. And James Kwak has some detailed reasons why this particular Plan B doesn’t look so hot.
Interestingly, one other big problem at Treasury is too few cooks rather than too many:
Obama’s senior economic advisers were hobbled in crafting the plan by a shortage of personnel. To date, the president has not nominated any assistant secretaries or undersecretaries at the Treasury, and the handful of mid-level staffers who have started work were still finding their offices and getting their building passes and BlackBerrys.
Moreover, the department made a strategic decision to limit input from the financial industry and other outsiders, aiming to prevent leaks and avoid a perception they were designing the plan for the benefit of big banks. But that also meant they were unable to vet their plan with the companies involved or set realistic expectations of what would be announced.
It’s a serious problem for America and the world that Treasury has basically done nothing since November 4, when Paulson lost his mandate and basically started doing as little as he possibly could. How long does it take to switch teams?