Thomas Oliver: A closer look at Geithner's plans

Finally. A plan.

Two plans actually.

Six months after the secretary of Treasury and the chairman of the Federal Reserve scared Congress out of $700 billion to buy up toxic assets that had frozen lending around the globe, a new Treasury secretary has come forth with the plan.

In between then and now, most of the $700 billion went to other cleanup efforts. Meanwhile, the economy fell off the edge.

The numbers are in. Fourth quarter 2008 was the worst since the 1930s. In other words, the worst in our lifetime.

This quarter, though bad by most standards, shouldn't be as historic. There are hints that maybe, just maybe, the worst is over.

Either way, there is still a mighty big mess to clean up before one can even think about a recovery forming.

The Geithner plan, as it is known, is not as complicated as the credit-swap derivatives that it doesn't address.

Still, it's hard to explain in English. As for transparency, mud is clearer.

In a nutshell, the government will guarantee billions in loans and spend an additional $100 billion left in the TARP account to entice private investors to partner with government to come up with a price banks will accept for their troubled assets.

Bankers seem to like the thrust, though the devil is still hiding in the details.

Joe Brannen, the Georgia Bankers Association's president, says it could help community banks if loans for home construction and lots are eligible for pooling and purchase.

Mark Vitner, a senior economist at Wachovia, says the plan could work, but how well is the real question.

What's left of the TARP money is way shy of the $1.8 trillion in bad debts banks are sitting on. Vitner says Treasury can go back to Congress for more money only if it has some initial success.

Mark C. Kanaly, a partner in financial services at Alston & Bird, says the missing piece is still the price. How to price those assets has been the hang-up that has stalled the plan for so long. Banks can't afford to sell them too cheaply, as the write-down on their balance sheets would lead to an FDIC takeover.

While bankers, lawyers and investors across the country were studying Timothy Geithner's plan, the secretary came forth with another plan, the one to re-regulate the industry.

You probably heard we need more regulation.

I mean, why would anyone doubt we need more than just the Commodities Futures Trading Commission, the Federal Deposit Insurance Corp., the Federal Reserve, the Office of the Comptroller of the Currency, the Security & Exchange Commission and the Treasury Department. Not to mention the plethora of state agencies regulating from sea to shining sea.

It wasn't the lack of regulation but an abysmal absence of quality oversight that permitted this mess to get out of hand.

Thomas Oliver writes for The Atlanta Journal-Constitution. E-mail: toliver

@

ajc.com.

Cox News Service