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 Anyone hoping to hear the nitty-gritty of the new public-private investment scheme dreamed up by the Obama administration was bound to be disappointed by Treasury Secretary Tim Geithner's slim-on-details new bailout plan Tuesday. He offered no specifics about how the government would spur private investment from capital sources such as buyout firms and hedge funds and suggested that more details would be forthcoming.After the build-up to Geithner's address, investors clearly expected something more dramatic and concrete, and their disappointment was tangible: Both the Dow and S&P 500 fell 5%. Blackstone Group LP, which bought LBO debt from several banks last year and could have been a major beneficiary of a government plan, saw its shares fall 10% to $4.44. Sources following the bailout say the vagueness had a lot to do with the overwhelming workload for Geithner and those around him. But it also reflects the fact that the bailout process will evolve as buyers emerge and negotiate with the government. Bailing out banks is almost routinized under the Federal Deposit Insurance Corp., a bureaucracy staffed by experienced bank seizers. Not so the sale of arcane, illiquid debt products, for which the government hopes it can find private buyers. There are few precedents, and what works at an early stage in a frozen market may not be the best solution further into the recovery. Given the heat that Geithner's predecessor, Hank Paulson, took for announcing plans and then reversing course, it would have been foolish for Geithner to get more specific than necessary. Outlining detailed financing terms, for instance, would make no sense until government officials have talked at length with private capital sources. Geithner simply hasn't had time to hire underlings for that laborious process. "It's a very thin staff doing God's work," said one source. A framework is likely to emerge when the government has had time to entertain and digest proposals from would-be buyers. - John E. Morris See the full speech on Dealscape CategoriesPrivate capital video
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