Time to Focus on the Financial Rescue Revamp

Lots of news out there today. We think that if you are pressed, just wait for the stimulus package to get through the House/Senate conference before drilling down on what is/is not in it. Once the dust settles you can examine the details (and that will be soon). Instead, today we think it is worth your while to look at the revamped bank rescue plan that we noted in Next Week's News Today would be unveiled today.

Here's why you care: While the stimulus package will help spending, the bank rescue plan will help lending. Sort of right hand and left hand. That's why we suggest you read the Wall Street Journal's Deborah Solomon and Damian Paletta today. They've got a good primer on where Treasury Secretary Geithner is going with his new plan. Headlines: 1) There's going to be a private-public effort for a bank to help other banks to unload assets which are causing problems (sometimes referred to as toxic assets - but we think that's not exactly the appropriate term, none the less this structure helps banks get rid of investments that are hurting their bottom line), 2) Banks will also get more money from government if needed but they have to subject themselves to a "stress-test" which means the government gets to look at the books and figure out what each bank's health is which requests money (don't discount this - very important). Which is to say Treasury doesn't want to pump money into banks that are going to fail, and 3) the Federal Reserve will help further on the consumer lending front. Solomon/Paletta have got a great breakdown. And we expect you'll see more after today's hearings.