Yesterday's unveiling of the Administration's banking plan to deal with so-called toxic assets generated largely positive reviews on network television and some skeptical coverage from the print media, where front-page reports in the Wall Street Journal, Washington Post, McClatchy and New York Times are offering notes of caution about the proposal. Particularly negative is a piece in the Washington Post that says "a chorus of academics and financial experts expressed skepticism" about the plan, "saying there are better ways to restore the health of the banking system." A number of TV reports, meanwhile, painted the reaction to yesterday's unveiling as a vindication for Treasury Secretary Tim Geithner. TV stories also noted what ABC World News described as the stock markets' "strong endorsement" of the plan, recalling that "six weeks ago, when...Geithner unveiled the outline of the banking plan, the speech was panned and the market tanked," but yesterday, "as more details came forward...the reaction was quite the opposite." The CBS Evening News put it in similar terms, "The Treasury put out the details today of a plan to rescue America's banks, and Wall Street responded with two thumbs up and a triple-digit rally."
The Los Angeles Times notes that following the announcement, "the Dow Jones industrial average rocketed 497.48 points, or 6.8%, to 7,775.86. The Standard & Poor's 500 index rallied 54.38 points, or 7.1%, to 822.92. The Nasdaq composite index advanced 98.50 points, or 6.8%, to 1,555.77." The AP also reports that "shares of the country's largest banks...soared on Monday. Citigroup Inc. jumped 19.5 percent, and Bank of America Corp. added 26 percent." And "even banks seen as being on better footing posted big advances. JPMorgan Chase & Co. rose 25 percent, while Wells Fargo & Co. rose 24 percent."
The Politico notes that "the last time" Treasury Secretary Geithner "announced a bailout plan," the Dow "closed down that day by 380 points." White House economic advisor Austan Goolsbee, on MSNBC's Hardball, said, "The President was clear when the stock market is down. He was saying ... 'this is not how we should evaluate our economic program.' And when the stock market's up, he'll say same thing." The AP notes that "the introduction of the plan was closely choreographed so that" President Obama, "rather than...Geithner -- would be the first administration official to appear on camera at midday to discuss it." Geithner, on CNBC, said taxpayers are "going to get a return that private investors get alongside the market in this case. ... The alternative approach is the government buying all this stuff." The Financial Times notes Geithner said his plan was "'completely different' from" former treasury secretary Hank Paulson's TARP. In its own analysis, the Wall Street Journal notes Paulson "abandoned plans to deal with the toxic assets last year, in part because of the difficulty of determining a proper price for assets where no market currently exists."
On its front page, the Financial Times reports "prominent investors" yesterday "vowed to take part in the programme." However, the Wall Street Journal says "many investors said they'd need to see even more details before deciding whether to take part." The Washington Post reports that "some banks are resisting government pressure to sell assets at prices they believe to be too low." The New York Times says "it is too early to tell whether the inducements amount to a huge taxpayer giveaway."
The Washington Times reports House Minority Whip Eric Cantor "called the plan 'a shell game." However, Roll Call is reporting that "top GOP Senators" yesterday "toned down their criticism. In fact, some Republicans suggested Geithner was being scapegoated by the administration to protect Obama."
White House Aides Respond To Krugman Responding to the New York Times' Paul Krugman's critical assessment of the treasury plan, NEC director Lawrence Summers said on CNN's The Situation Room , "I wish he'd waited until the plan had been announced and the steps had been described before he had written his column. ... It's an approach to do something that I think almost all economists regard as essential, restarting the capital market, because restarting the capital market is necessary if you're going to have loans." Obama economic advisor Austan Goolsbee said on MSNBC's Hardball, "The only thing to say in the reference to Paul Krugman's column is the only two alternatives to doing it this way are to either have the government pay for the whole thing itself...or else do nothing."
Editorial Pages Offer Mixed Reviews The Wall Street Journal, in an editorial, says, "This isn't the worst idea the federal government has ever had, and if it works it will help banks take their losses and burn down debt." The New York Times editorializes that the plan "could work if certain assumptions about the future are right. But there is not much, beyond faith, to believe those assumptions will pan out -- and even if there were, it is hard to see how the plan is the best way to go." The Washington Post, in an editorial, says, "It's worth a try, but hardly guaranteed to succeed." The Washington Post also publishes reaction to the treasury plan from several "experts." George Will, in his column for the Washington Post, claims the Obama administration, "desperately seeking confidence, tries to stabilize the economy by vastly enlarging government's role in it."
The AP reports that yesterday the White House said Treasury Secretary Geithner "will visit Capitol Hill on Thursday to start outlining" the President's "plans to update financial regulations." On its front page, the Washington Post says the Administration "is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy." The Treasury secretary "would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document."
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The Wall Street Journal reports that over the weekend, Treasury Secretary Geithner "and his colleagues" told bank officials "they don't favor using the tax code to retroactively penalize specific individuals who had received bonuses." The Hill notes that yesterday, Geithner "declined to endorse congressional plans to tax bonuses but also stopped short of saying the president would veto such a plan." USA Today reports, "One of the biggest concerns is that amid public fury and congressional action about bonuses paid to employees receiving government aid, investors will be too worried that the rules will change midgame." Last night Fox News' Special Report's Major Garrett reported that at yesterday's White House briefing, he asked spokesman Robert Gibbs "if the administration was in any way, shape or form considering putting any kind of limits on executive compensation for publicly-traded firms and he said 'no, only that driven by shareholders, not by the government.'" Charles Babington, in an analysis for the AP, says President Obama "raced to the front of the pitchfork crowd last week, feeding public furor over bonuses paid to publicly rescued companies. But now, amid signs that rescinding the bonuses might undermine his financial-sector bailout plan, the president is waving an olive branch. Obama's tone changed dramatically over the weekend."
Senate To Delay Vote On Bonus Tax The Washington Post reports that "Senate leaders are likely to delay until late next month legislation to punitively tax bonuses at banks and investment firms that receive federal aid." The Post adds that "one key Democratic defection was Senate Budget Committee Chairman Kent Conrad (N.D.), who said the bonus tax raised serious constitutional questions because of its narrow focus." The New York Times adds that "after complaining last week that Republicans were blocking a similar bill in the Senate," Senate majority leader Harry Reid "indicated on Monday that any action would be delayed." Senate minority leader Mitch McConnell said, "I gather from listening to the administration over the weekend that they are having some second thoughts about whether this is the right way to go." According to USA Today, some "legal analysts questioned the constitutionality of such a levy," but "other legal scholars said the constitutional issues are easily addressed."
Cuomo: AIG Execs Have Returned $30 Million NBC Nightly News reported that New York State Attorney General Andrew Cuomo announced "that of all of those bonuses handed out to AIG senior executives, nine of the top ten executives have given the money back. So far, $30 million has been returned by the top 20 employees." The CBS Evening News added that Cuomo "says he hopes to recoup about half the bonus payments, about $80 million." According to the AP, "In total, AIG employees have agreed to return about $50 million of the $165 million in bonuses awarded." The Wall Street Journal reports AIG "said it is 'deeply gratified that a vast majority of" its Financial Products division's senior leadership "have expressed a willingness to forsake their recent retention payments."
The tenor or the media coverage of President Obama's plans to visit Congress to lobby lawmakers for his budget priorities was somewhat negative. Reports focused on potential resistance from moderate Democrats, who seek a lower level of spending, and note Republicans' harsh criticism. The Washington Post reports President Obama "will go to Capitol Hill this week to try to persuade skeptical Senate Democrats to support the administration's first budget request after an analysis showed that the spending plan would drive the nation deeply into debt over the next decade."
The AP reports Senate Budget Committee Chairman Kent Conrad "wants to cut as much as $30 billion from agency budgets while promising to protect initiatives like energy, education and health care." But he's "running into opposition from other powerful Democrats like Sens. Daniel Inouye of Hawaii and Patty Murray of Washington." In the House, "moderate 'Blue Dog' Democrats are pressing for even deeper cuts."
Roll Call reports the "prospects for" President Obama's "budget priorities are dimming as moderate Democrats in both chambers look to trim his spending and slow his plans for a cap on carbon emissions." Fox News' Special Report reported, "Lawmakers were stunned last week when new higher cost estimates of the President's budget were revealed." The news "the Obama administration's budget would borrow $9.3 trillion over ten years, $2.3 trillion more than previously estimated, is taking the breath away from some budget hawks, because it triples the national debt in ten years."
Sen. John Barrasso (R-WY), on CNBC said, "This incredible budget...is absolutely a threat to this nation. This is a budget that spends too much. It taxes too much. It borrows too much." Sen. Sherrod Brown (D-OH), on MSNBC's The Rachel Maddow Show, said, "The Republican plan looks a lot like it did in my first year in the House in 1993 when their plan was to vote 'no' on everything, their plan was to say the sky is falling, their plan was to say it would plunge the nation into recession for sure, depression maybe. .. The fact is, I don't agree with everything in the Obama budget, of course not. It's absolutely right on health care. It's absolutely right on education."
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Roll Call reports that DNC Chief Tim Kaine yesterday "announced a 37-member panel that will look into overhauling" the Democratic Presidential primary process, and Missouri Sen. Claire McCaskill (D), "a top surrogate for President Barack Obama on the campaign trail, and House Majority Whip James Clyburn (D-S.C.) will serve as the panel's co-chairmen.
The AP reports that yesterday in Jefferson City, Missouri, Mike Huckabee (R) "likened abortion to slavery in a...speech during a fundraiser for an anti-abortion group," and Missourinet.com adds Huckabee said, "The idea that one person, in this case a biological mother, would have life and death control over another human being - albeit her own child - but could have that level of ownership over another is no longer just an issue of politics or culture, but the utmost essence of moral behavior of a civilized people."
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The AP reports that while Illinois "is dominated by Democrats," NRSC Chairman Sen. John Cornyn said yesterday that the GOP has a "good" chance to win Sen. Roland Burris' (D) seat in 2010 if they get the right candidate because of a "backlash" against the "Blagojevich machine."
The New York Daily News reported on its website that a Siena Research Institute survey of 626 registered New York voters conducted March 16-18 shows New York Sen. Kirsten Gillibrand (D) leading likely challenger NY3 Rep. Peter King (R) 47-23% and in a dead heat (41% apiece) with former Gov. George Pataki (R).
The Albany Times Union reports that the Siena Research Institute poll also shows Gov. David Paterson (D) trailing state Attorney General Andrew Cuomo (D) 67%-17% in a Democratic primary trial heat, and also trailing Rudy Giuliani 56%-33% in a general election trial heat.
The Wall Street Journal reports Illinois Sen. Dick Durbin (D) "is set to introduce a bipartisan bill this week that would give congressional candidates the option of financing their campaigns partly through a public fund, in exchange for limiting their funding from corporate political-action committees." The Washington Post adds, "Under the proposal, House candidates would qualify for public money by raising a minimum of $50,000 from at least 1,500 people in their home states. The minimum for Senate candidates would vary by state, based on population."
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Jay Leno: "The Obama Administration" today unveiled their "plan to deal with the so-called toxic assets. Those are those mortgage-backed securities...all the financial institutions are holding. Apparently, the plan is to flood the banks with money, make them as liquid as possible," and "then sort of soak up all these bad loans and take them away. See, they got this idea from watching those ShamWow commercials."
Jay Leno: "As you know, Congress is now investigating the special treatment that 'Senator Dodge,' as we're calling him now, received from Countrywide Mortgage for a couple of mortgages. Senator Dodd has contended he didn't know he was getting special rates on the mortgages. ... And, really, to be fair, how would the Senate chairman of the banking committee have any idea what the normal lending rate would be? He would have no idea!"
David Letterman: "The Obama Administration" wants "to unload a trillion dollars in toxic assets. I don't know what that means," but "do you know how much a trillion dollars is? A trillion dollars" is "almost as much as the AIG bonuses."
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