President Obama's bank rescue plan will be unveiled Tuesday by Treasury Secretary Timothy Geithner. The plan, scheduled to be released on Monday, was delayed due to the expected vote in the Senate on the latest Stimulus Package. The bank rescue plan is rumored to rely heavily on private sector funding backed by government guarantees and financing incentives. It may also include some of the $350 billion in unused T.A.R.P. money.
The Obama administration has not ruled out the creation of a "Bad Bank", much like the one created during the Savings and Loan Crisis, to buy up illiquid assets on lenders books. This option proved to be profitable in the long run last time.
Geithner is also expected to expand $200 billion in Federal Reserve funds in hopes of loosening up credit for U.S. consumers.
With all this being said, Tuesday is going to be a very important day for all of us. The unveiling of the bank rescue plan strikes at the core of our slumping industries problem; access to credit. How the stock markets, investors and consumers react to this plan will determine how long the housing market will struggle. Without credit, the blood of our industry, the housing market will remain lifeless.
If this plan is widely accepted by investors and supported in a bipartisan fashion, coupled with the $15,000 home buyer tax credit, then I will be optimistic about our near future in the housing market. If the bank rescue plan fails to impress and President Obama and Treasury Secretary Geithner can not garner support for their plan, I do not foresee an end to our housing crisis.
We need credit to flow freely in the market. I hope President Obama understands the importance of this crucial issue and does what's right for the U.S. economy. The U.S. economy runs on credit and without it, well just look where we are. I will be tuned in on Tuesday, hoping for a knockout.