Geithner and the Public-Private Investment Program

Treasury Secretary Tim Geithner has a plan, the Public-Private Investment Program.

From the Wall Street Journal:

Mr. Geithner's three-pronged program, which will be unveiled Monday, envisions the creation of a series of public-private investments to soak up $500 billion, and maybe as much as $1 trillion, in troubled loans and securities at the heart of the financial crisis. To encourage investors to buy those assets, the U.S. government will offer lucrative subsidies and shoulder much of the risk. Stocks rallied 2% in Tokyo in early trading Monday, on expectations of the Geithner bank plan's announcement.

Taxpayers will stand to reap gains -- alongside investors such as hedge funds and private-equity firms -- if the investments ultimately prove profitable.

The effort is part of Mr. Geithner's broader plan to stabilize the financial system and builds on earlier programs to pump capital into banks, restart consumer and small-business lending, and help some homeowners pay their mortgages. Many economists argue that financial firms need to purge troubled loans and securities clogging their balance sheets if they are to regain the confidence to resume lending.

Mr. Geithner outlined the latest effort in general terms last month, and Wall Street has been eagerly awaiting details. But the rollout comes at an inopportune time, with bailout fatigue turning to rage amid a furor over bonus payments to employees of American International Group Inc.

As a result, whether or not the prescription is correct to fix what ails the financial sector, there is likely to be concern about an effort that appears to reward Wall Street. Some investors have already said they're leery of working with the government for fear the rules will change midstream, as is happening with Congress's moves to cap Wall Street bonuses for firms receiving financial aid.

Of course, there's likely to be concern about any program that seems to reward Wall Street.

Thanks to Obama and the Dems, Wall Street has been vilified.

How many times have you heard Obama yap about greed and Wall Street?

He incited anger and intentionally whipped people into a frenzy of outrage over .1% of the bailout money AIG received. I don't get why people are so freaked out over that. What about the other 99.9% of the money?

Obama and his hacks have encouraged implementing means to squash the private sector. Capitalism is the enemy in the Obama new order.

This article in the New York Times, "Administration Seeks Increase in Oversight of Executive Pay," details an aspect of the assault.

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

...Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system

...The administration has been considering increased oversight of executive pay for some time, but the issue was heightened in recent days as public fury over bonuses spilled into the regulatory effort.

This "public fury" stuff is a problem. Public fury fuels politics, but running a business is different. Decisions are made to pursue success for the business, profit, not to appease an angry mob.

Here's a very disturbing aspect of the administration's plan:

Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

By handing down orders rather than passing legislation, it circumvents the system. There's no debate, no representation. The changes are just being thrust on the people.

The Obama administration really is putting out mixed messages. One day, there's talk of intervening in the private sector and placing caps on executive pay, a massive power grab.

The next day, Geithner is pushing his plan for public-private cooperation.

The administration wages war on private business at the same time it seeks to enlist it to help solve the economic problems.

Rules are changed on a whim.

No wonder there's such wariness.

Obama has been in office just two months and he's given the American people so many reasons not to trust him.