WASHINGTON — Sen. Bob Corker, a member of the Senate Banking Committee, called Treasury Secretary Timothy Geithner’s announcement Tuesday of a revamped Wall Street rescue plan “vague” and insufficient to fully deal with the financial industry’s woes.
“What was announced (Tuesday) was more platitudes,” the Tennessee Republican said. “It’s evident to me that there’s still dissension within the White House as to what to do. I think that roiled the markets. I think people are looking for clarity.”
The Dow Jones Industrial Average closed down 4.6 percent Tuesday, and analysts attributed the plunge to disappointment in the lack of details from Mr. Geithner.
Sen. Corker, who spoke before Mr. Geithner testified before the Banking Committee in the afternoon, said the Obama administration should have waited until it had a concrete strategy before making an announcement.
The Treasury secretary, citing the urgency to act after 3 million jobs disappeared last year, described plans to establish an aggregator bank in which the government would partner with private firms to aid struggling banks by taking toxic debt off their balance sheets.
“Institutions that need additional capital will be able to access a new funding mechanism that uses money from the Treasury as a bridge to private capital,” Mr. Geithner testified. “The capital will come with conditions to help ensure that every dollar of assistance is used to generate a level of lending greater than what would have been possible in the absence of government support.”
The plan is part of the Obama administration’s overhaul of last year’s $700 billion Wall Street rescue package. It also would expand a lending program to unfreeze credit markets. Mr. Geithner promised transparency in how the federal funds are used.
Sen. Corker said administration officials have not been forceful enough in the credit crisis and have allowed impaired banks to continue to limp forward.
Facing the crisis full-on would require significant capital injections into the banking system, he said.
“I haven’t heard what your commitment is to solving this problem,” he told Mr. Geithner in the hearing. “I have not heard of this ‘comprehensive’ plan to deal with this, and that creates uncertainty.”
Mr. Geithner responded that full details have yet to be fleshed out.
“What we’ve laid out today (is) the broad set of principles and objectives and some new programs that will need to be a necessary part of this solution,” he said. “People want to see details, and they want to know how it works. What we’ve done is tried to lay out how hard this is going to be to solve.”
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