Treasury’s guide on how to spend 12 zeros after the 1

February 10, 2009

A trillion dollars is a million million dollars or 12 zeros after the one.

And that’s how much apparently every program costs to save the U.S. economy these days.

Treasury Secretary Timothy Geithner outlined what he called “a new financial stability plan” to help restart the flow of credit, strengthen banks, and  “provide critical aid for homeowners and for small businesses.” FINANCIAL/BAILOUT

His proposal included a program in which the FDIC, the Federal Reserve, and the private sector would establish a fund, using government financing, to deal with bad assets weighing on financial firms.

“We believe this program should ultimately provide up to $1 trillion in financing capacity, but we plan to start it on a scale of about $500 billion, and we will expand it based on what works,” Geithner said.

Another piece of his plan would commit up to $1 trillion (there’s that number again) to support consumer and business lending with the Treasury and Federal Reserve working together to “kick-start the secondary lending markets.”

All that is separate from the economic stimulus legislation being fought over on Capitol Hill right now,  which is running about $800 billion (add $200 billion and that’s another trillion). 

Geithner, who came to the job with a bit of a tax issue in his past, showed that he was well aware of the math for his proposed economic rescue programs.

“Now, many of the programs I’ve discussed involve very large numbers,” he said.

And again.  “But I want to be candid:  This strategy will cost money, it will involve risk, and it will take time.”

“But as costly as this effort may be, we know that the cost of a complete collapse of our financial system would be incalculable for families and for businesses and for our nation,” he said.

Click here for more Reuters political coverage

Photo credit: Reuters/Jim Young (Geithner unveils financial rescue plan)

5 comments

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I hope this works but it is doubtful until we stop shedding jobs and start creating them in sectors that will be there for the long haul. Also I noticed only $50 billion was set aside for the housing market and that will continue to deteriorate as well lose more jobs that leads to more defaults. My last issue is with the toxic asset plan, we need more details on how that will work and disclosure from the banks on what assets that are toxic. My fear is that a bulk of these so called assets are actually CDS contracts that are either on risky companies or have already gone bust when Lehman, Freddie and Fannie went under or was nationalized respectively. .03

There should be transparency with regards to how and where
the funds being disbursed and accountability on how the funds are being used to restore confidence in the economy.
Unless the people are in the know, those who have the money would not want to spend their money.

Posted by Regeev Govindan | Report as abusive

According to a recent Harvard Business Review or research study of large American companies, the CEO of a typical big corporation like AT&T, Intel or Cisco earns 300 times the pay of an average worker under him/her.Suppose Joe Brown at Microsoft gets paid $15/hr to refurbish old MPs,that means Mr.Ballmer, the Microsoft CEO will be earning $4500/hr! That is a conservative estimate and excludes the allowances and benefits.CEO of bailed banks are in the same category but unlike Mr.Ballmer who is running a successful company at Microsoft.Like their comrades at the Detroit automobilecracy,the CEOs of large US banks like Citigroup,MBNA,BoA and so on have been failures,flunkies in grey suits.They were about to declare bankrupt when the govt rescued them with a bailout.The govt spent about $900 billion dollars to bail them out.And what do spoiled sugardadies do after that? They rewarded themselves with nearly $20 billions of our tax money as bonuses and “benefits”! What did our new enlightened president do? He angrily barked but did not bite! We need to bark and ferociously bite!The first step to prove that the bailout money is well spent is to seize the $20 billion the CEOs rewarded themselves!

Posted by 2SingoStar | Report as abusive

If I as a taxpayer must support this what is in it for me…my family…my colleagues. For way too long the rich have ridden this misshapen ideal that provides them everything regardless of the consequences. How will the average working American benefit? This question is passed up too often in lieu of protecting the interests of those who do not care at all about America or its people, only their own wallet. The banks have shown that they are untrustworthy. Where are the checks and balances??

Posted by Damion Perry | Report as abusive

the market collapse ,it is bush supporters fault?that the excuse eric,the democrats for two years talked the economy down as a ,tactic. republicans are all ways country before party that,s the difference,you can see the indecision now spreading in the democratic ranks.yes barney frank and cris dodd should hold their heads in shame.

Posted by brian lee | Report as abusive