Wall Street gave a thumbs-down message to President Obama's new $1 trillion bank bailout plan Tuesday, sending stocks into a nosedive. Obama's response: Deal with it.
"Wall Street, I think, is hoping for an easy out on this thing, and there is no easy out," a stern Obama told ABC News in what he conceded was a "tough love" message.
There are two choices now facing Wall Street companies, Obama added - prolong the nation's agony by refusing to be "transparent" about the self-inflicted losses on their books, "Or you can just go ahead and acknowledge that, yeah, there's a lot of work that has to be done to put these banks back on a firmer footing," Obama said on "Nightline."
"One hundred million dollar bonuses annually are not a birthright," he added with an exasperated laugh.
It was Obama's most forceful slap to date at financial bigwigs, delivered hours after his Treasury secretary, Timothy Geithner, unveiled a new bank bailout aimed at mobilizing up to $1 trillion in public and private lending for the ailing economy.
Wall Street quickly declared the massive package lacking in scope and detail and responded in its usual way: Major stock indexes fell, including the Dow Jones industrial average, which tumbled 382 points, its biggest one-day drop since Obama became President.
"The bottom line is it won't work. More will be needed [to right the economy]," said Hugh Johnson, chairman of Johnson Illington Investment Advisors.
The Treasury Department plan has three main components: more cash for banks (with more strings attached), financing for as much as $1 trillion in consumer and business loans, and government backing for investors willing to buy up toxic assets.
As such, Geithner's plan was effectively a makeover - and aggressive expansion - of the $700 billion bailout Obama inherited from President George W. Bush, half of which is already spent.
For struggling homeowners, there was a big bright spot: $50billion in federal cash to try to reduce mortgage payments and stem foreclosures.
The problem, said many investors, was that Geithner's plan offered no guidance on how the administration will price the lousy mortgages now cluttering many bank portfolios, making a true valuation tough.
"Unfortunately, [Geithner] did not touch on that," said Ryan Detrick, chief technical strategist at Schaeffer's Investment Research.
Alabama Sen. Richard Shelby, the top Republican on the Banking Committee, added to the chorus of questions later during testimony by Geithner.
"Is there a concrete plan here?" Shelby asked, wondering if the lack of detail was "aggravating economic problems by contributing to marketplace uncertainty."
Geithner conceded his plan was short on details but said that was on purpose - for now. "We're going to be very careful to flesh out the details and design of these things in ways that protect the taxpayer," he testified.
He had at least one defender - New York Sen. Chuck Schumer, who gave Geithner credit for taking a different approach from his predecessor, Henry Paulson.
"I think when the markets see the details, they're gonna be happy," Schumer told the Daily News. "But they're not rushing into it so they avoid the mistakes that Bush made."
Despite Wall Street's grumpiness, Obama defended his tough talk.
"I'm constantly trying to thread the needle between sounding alarmist but also letting the American people know the circumstances that we're in," he told ABC. "And the fact of the matter is that we are in not just an ordinary recession - we are in a perfect storm of financial problems."