Thursday, July 9, 2009

Treasury Department Has Plan C To Solve Financial Crisis

Did you know they now have Plan C to solve financial crisis? I didn't. I didn't even know they had Plan A and Plan B, or any Plan at all.

Treasury Works on 'Plan C' To Fend Off Lingering Threats
(by David Cho and Binyamin Appelbaum, 7/8/09 Washington Post)

"As the financial system tries to right itself after its near-collapse last fall, the Treasury Department has assembled a team to examine what could yet bring it down and has identified several trouble spots that could threaten the still-fragile lending industry.

"Informally known as Plan C, the internal project is focused on vexing problems such as the distressed commercial real estate markets, the high rate of delinquencies among homeowners, and the struggles of community and regional banks, said government sources familiar with the effort.

"Part of the mission is assessing which firms are the most vulnerable and trying to decipher what assets these companies hold and whether they pose a danger to the wider financial system. Plan C is a small-scale, relatively informal approach to a problem the administration hopes to address in the long term by empowering the Federal Reserve to oversee systemic risk."

"The creation of Plan C is a sign that the government has moved into a new phase of its response, acting preemptively rather than reacting to emerging crises, officials said.

"We are continually examining different scenarios going forward; that's just prudent planning," Treasury spokesman Andrew Williams said."

Huh? Now, can you tell what the hell they are talking about? Does this look like a newpaper article written by a reporter who actually digs in to find out more about this Plan, or does this look like a cut and paste job from the Treasury Department's public relations office handout?

"The officials in charge of Plan C -- named to allude to a last line of defense -- face a particular challenge in addressing the breakdown of commercial real estate lending."

OK, so it is about commercial real estate. And what is Plan C, exactly? The article doesn't say, and doesn't even speculate.

Remember this from March? The Treasury Secretary Tim Geithner said the plan (whatever plan he was talking about at that time - I suspect it was PPIP which has shrunk from $1 trillion to mere $40 billion) would work (and therefore he didn't need Plan B), all that was required was "will", not "ability":

(Doesn't his forehead look like a Klingon?)


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