In fact you do have to wonder if this plan -- if that's what it is -- was rushed too quickly to the big stage in the Cash Room. As our own John Morris posted Tuesday afternoon, his sources are suggesting that Geithner, delayed by his tax woes and the confirmation process, has simply not been able to staff up adequately. That's fine, but then this was a large political miscalculation that travels back to the White House -- and that's not considering the fundamentals of the plan. There is interest in financial circles in this public-private partnership. But private investors are also clearly waiting for the best deal, that is, for the lowest asset prices and best guarantees. And there's the rub. The country politically looks at private capital as self-interested pirates (or worse), which, of course, insults aside, is what they are. They're going to want to maximize their investment, which has to come at the expense of the party on the other side of the table, Treasury and taxpayers. That would always be a delicate dance, but given the current climate, both sides are edging toward each other like two pimply kids at a sixth-grade dance.
And then there's those banks, the heads of which are trudging up to Capitol Hill to get yelled at Wednesday by the economic geniuses on Barney Frank's banking committee. If I were a betting man, I'd wager that over half of those CEOs lined up like perps are effectively toast. No offense, but Vikram Pandit won't survive the next six months. Neither will Ken Lewis. And you have to look at every one of the rest -- even Jamie Dimon and Lloyd Blankfein -- and wonder how they will fare if their institutions undergo a real "stress test." As both Wolf and Kessler point out, the stock market is currently assuming that many of these banks are insolvent.
This is where you get to the hard stuff. The FT's Wolf, in as deflating a column as I've read in some time, goes back to first principals, asking whether we're dealing with a panic, driving asset prices below their "true" value, or an insolvency, in which the falling assets are at, or near, their true value. The stock market believes the latter. So does Wolf. Henry Paulson's TARP plan, he says, assumed the former, and so does Geithner's scheme. Wolf argues that, like Paulson's TARP, the Geithner plan is too small, too vague, without the necessary "focus and ferocity," a "blunder." Wolf argues that zombie banks should be taken over and that better banks should be recapitalized, through capital injections or debt-to-equity swaps. There would be pain, for creditors, shareholders, and senior managers. And time is already slipping past. Obama, Wolf declares with a pundit's certainty, will face a failed presidency if he doesn't take more decisive steps quickly.
Wolf is not Dowd. His best argument is not that the banks are insolvent, it's that the wisest course is to assume they are. The worst-case scenario: You end up with overcapitalized banks at some point. But for all his acuity in these matters, Wolf overestimates Obama's power and underestimates the political currents (he also thought Obama let Congress screw around with the stimulus too much). Obama's polls are very high, but he's not a dictator. Politically, the country seems to want vigorous action; but the country is also aflame about taxpayer money going anywhere near what it views as a black hole on Wall Street. Those two considerations jostle uneasily on Main Street and in Congress. Clearly, both the stimulus and the TARP redo have been shaped by political considerations about what is possible and when. Given all that, maybe the best news is that Geithner did not provide a lot of details. This is a canvas that still needs to be filled in.
One last point, that applies to this reaction to the Geithner bailout and to any number of other episodes since Obama came into power, notably the stimulus. There is a sense in the peanut gallery that since Obama won, he, like Franklin Roosevelt, should launch 100 days of nearly mythic action, cramming legislation through Congress with alacrity. By that standard -- an impossible standard -- Obama has already fallen behind. In fact, the New Deal in its first year did good things and stupid things. The situation was dramatically worse than today, but the Republicans fought back, and there were always tensions between center and left within the Democratic coalition. The politics were messy; the policies empirical and ad hoc. As time passed, the mistakes faded, the infighting receded, and the triumphs stood out. It's a rank cliché, but nonetheless: Up close and personal, politics is always a mess. Give it time. Give Obama time. Just not too much. - Robert Teitelman
Robert Teitelman is the editor in chief of The Deal.
Boy, were those reviews bad. If Tim Geithner's rollout of the bank bailout redux package was a Broadway play, it would have been closed before the cast party began. The stock market gave it a big Bronx cheer (well before he finished talking), followed up by Congress tossing rotten fruit, then capped off by columnists Wednesday morning, from The New York Times' 
