UPDATE: Earlier today, U.S. Treasury Secretary Tim Geithner made a speech outlining the government's plan to get credit flowing again in the economy. Here is a link to the speech: Secretary Geithner Introduces Financial Stability Plan, and here is a link to the Financial Stability Plan Fact Sheet which has been posted on a new website Geithner announced that includes materials relating to the plan, at www.financialstability.gov.
ORIGINAL POST:Ahead of Treasury Secretary Tim Geithner’s speech slated for 11am today, at which he will unveil the Obama administration’s plan to shore up the nation’s banks and get credit flowing again, Deborah Solomon and Damian Paletta of the Wall Street Journal provided some expected details for the plan, which they say will be dubbed the Financial Stability Plan, in their article today, Banks to Get Stress Test Before Aid.
Separately, in his first prime time address as President, (see: Text of Obama’s Press Conference, Feb. 10, WSJ) President Barack Obama provided a briefing last night on the state of the economy, focusing on the economic recovery package that passed each house of Congress and now awaits a conference bill. He also spoke in general terms about the impending announcement of the bank rescue plan.
Mark-to-Market Debate Continues
We noted in our most recent post, and have covered this issue in prior posts (e.g. on some of the roundtables held last fall by the SEC and FASB on mark-to-market accounting and the credit crisis), that fair value or mark-to-market accounting is among the issues that crops up in discussions relating to the financial crisis and the bank rescue/stability plan.
Broadly speaking, there are generally two schools of thought - which may or may not necessarily be viewed as in conflict - depending where you stand: (a) that fair value (FV) or mark-to-market (MTM) accounting provides necessary transparency to toxic assets, and/or (b) that FV or MTM fuels a procyclical downward spiral in valuations of assets.
Somewhere in between, there may be a third school of thought, which may represent more of a compromise view: (c) that FV or MTM as currently constructed may contribute to an unnecessary downward spiral in valuations.
See links to some other recent articles on this subject in the Comments section here.
Snow, O'Neill Speak Out
Former Treasury Secretaries John Snow and Paul O'Neill were recently interviewed by Bloomberg News and provided their thoughts on how the bank bailout has been handled so far and recommendations for the future. O'Neill in particular is known as being outspoken, and is also known for his touring the world with U2's Bono in examining poverty and world hunger, when O'Neill served as Secretary of the Treasury. Read more here.