Obama's Economic Plan | ABC30 Fresno | abc30.com

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By ABC30

Monday, March 23, 2009

Fresno, CA The stakes are high for the White House as their more detailed plan to ease the credit crisis in the banking system is unveiled. Part of Treasury Secretary Tim Geithner's plan involves the government partnering with private investors, by offering government financed, low interest loans.

"We can't govern out of anger. Main Street has to understand, unless we get these banks moving again, then we can't get this economy to recover. And we don't want to cut off our nose to spite our face," said President Obama in a '60 Minutes' interview on Sunday night.

This partnership would eventually buy up to $1 trillion dollars in banks' toxic assets, now being called "legacy assets" by the administration; mainly mortgages that have gone bad. The goal is to jump start lending, by removing bad assets from bank balance sheets.

Christina Romer with the Council Of Economic Advisors: "The reason the government is coming in at all, is to re-create this market. But it's an open bid. That's why we're going in with the private sector. They're going to have money on the line, just like we are. And the whole idea is to not overpay for them."

Stocks opened sharply higher, a sign that Wall Street seems to like what it hears. But the president may face a hard sell. Some economists think the latest Geithner plan won't work.

After the AIG executive bonus outrage, people are skeptical about offering banks help.

The Treasury Secretary acknowledges the public's anger, but asks for patience. He expects the economy to pull out of recession, once the financial sector is stabilized.