“This is vague,” he points out. No one argues.

From the NY Times:

"Bailout, v. 2.0

It’s Bailout Tuesday, with the Treasury secretary announcing the outlines of his bailout plan. The first post, which will be at the bottom as the day goes on, comments on his speech. I will be adding to it, at the top, as he is questioned this afternoon at a Senate Finance Committee hearing. (My colleague Catherine Rampell is live-blogging the testimony by Ben S. Bernanke, the Fed chairman, before a House committee.)

4:15 p.m.| Vague: Senator Corker of Tennessee points out that promises of a detailed plan were not fulfilled. “This is vague,” he points out. No one argues.

3:55 p.m.| When?: The real question someone should ask is when they think they can get this working. Part of the problem with the stock market today is that some people — count me in that group — thought the administration would soon pump money into the market for bank assets. That could in turn persuade investors to take a chance on bank stocks, and drive them and the rest of the market up. But we have no hint when the money will flow, or details on how it will work. The index of S.&P. 500 financial stocks is down 10 percent today.

My suspicion is that the infighting in the administration — between those who wanted to really punish bankers and those who thought that would be counterproductive — was so intense and went on so long that there was no time to work out the details. The warning sign on the internet (see below) may be just one of the less important symptoms of that.

3:40 p.m.| Needed, Lower Standards: Senator Bennett, a Utah Republican, approaches one of the contradictions of this whole recovery. He wants to know if this will persuade banks to lower their lending standards, as he says needs to be done to let companies and people borrow the money they need.

Remember that we got into this mess, in part, because the lending standards were so low. Excessive leverage was another part of the problem. So here we are asking for lower standards and offering generous leverage and price guarantees to get people to buy the bad assets

Mr. Geithner says he wants the banks to make good loans, and that is is important for regulators to avoid “making it harder for strong banks” to expand their lending.

He did not really address the contradiction, but there is not much he really can say. If this works, we will gradually have to deal with getting leverage down. But long-term problems do not seem important when your house is burning.

3:20 p.m.| Praise the Past: Some of the senators, particularly Senator Richard Shelby, have harsh words for the old bailout that failed. Mr. Geithner defends it. “That action has helped,” he says. Without it, this situation would be “dramatically worse.”

2:45 p.m.| Another World: The Treasury has set up a new Web site, financialstability.gov, and to get what details are available on this you have to go there.

In his speech today, Mr. Geithner said, “The American people will be able to see where their tax dollars are going and the return on their government’s investment, they will be able to see whether the conditions placed on banks and institutions are being met and enforced, they will be able to see whether boards of directors are being responsible with taxpayer dollars and how they’re compensating their executives, and they will be able to see how these actions are impacting the overall flow of lending and the cost of borrowing.

“These new requirements, which will be available on a new Web site, FinancialStability.gov, will give the American people the transparency they deserve.”

When you click to go from the Treasury site to the new one, you get this warning:

You are leaving the Department of the Treasury public Web site. You are going to a Web site that the Treasury Department does not control and whose privacy policies may differ.

Is that intentional?

2:35 p.m.| Details, Details: As Mr. Geithner prepares to testify, the stock market is down 4 percent. (I remember that when that was a really big move. Now we are inured to wild swings.) Some of that may be disappointment at the lack of detail. Here’s one example that confuses me, from the Treasury’s fact sheet:

Public-Private Investment Fund: One aspect of a full arsenal approach is the need to provide greater means for financial institutions to cleanse their balance sheets of what are often referred to as “legacy” assets. Many proposals designed to achieve this are complicated both by their sole reliance on public purchasing and the difficulties in pricing assets. Working together in partnership with the FDIC and the Federal Reserve, the Treasury Department will initiate a Public-Private Investment Fund that takes a new approach.

Public-Private Capital: This new program will be designed with a public-private financing component, which could involve putting public or private capital side-by-side and using public financing to leverage private capital on an initial scale of up to $500 billion, with the potential to expand up to $1 trillion.

Private Sector Pricing of Assets: Because the new program is designed to bring private sector equity contributions to make large-scale asset purchases, it not only minimizes public capital and maximizes private capital: it allows private sector buyers to determine the price for current troubled and previously illiquid assets

How, I wonder do you get competitive pricing if there is one “public-private investment fund?”

I still think this can work. But I sure wish they had more details ready.

12:45 p.m.| Right Notes: Tim Geithner hit all the right notes in his speech on the new bailout plan today, and as I said last night on the Charlie Rose show, I think it has a chance to work. It is clear that he and his colleagues have given a lot of thought to what failed to work last year, and learned from the experience.

He detailed the problem:

Instead of catalyzing recovery, the financial system is working against recovery. And at the same time, the recession is putting greater pressure on banks. This is a dangerous dynamic, and we need to arrest it. It is essential for every American to understand that the battle for economic recovery must be fought on two fronts. We have to both jump-start job creation and private investment, and we must get credit flowing again to businesses and families.

It took former Secretary Hank Paulson and the Fed chairman, Ben Bernanke, too long to recognize that what they faced was not just a subprime mortgage problem, but a financial system that was not working. They believed that the banking system was well capitalized, when it was not. I don’t know if Mr. Geithner, who was president of the New York Fed at the time, wanted more action quicker, but I suspect he did.

The most important issue in making this work will be getting private capital to take the dubious assets off the banks’ balance sheets. It appears to me that the lending terms will be generous enough to make that happen, but we don’t know all the details yet.

There is a chicken-and-eggs aspect to this: If they can’t get the financial system going, and produce a sustaining economic recovery, then the value of the assets is likely to keep falling and those who invest in them will lose money, as will the taxpayers. But if they succeed, there is a good chance that many of these securities will end up worth much more than their current value.

Those interested in justice may be looking forward to tomorrow’s House hearing, where, as my colleague Andrew Ross Sorkin notes today, a group of bank chief executives are likely to be publicly flogged. The bankers who produced this mess deserve to suffer. But it is not easy to see how we revive the financial system while executing the people who run it.

Mr. Geithner helped to put into focus the fact that there are plenty of villains — including some of those who will be asking the questions this afternoon. He does not mention the press, but he could have. I did not pay nearly enough attention to the way the securitization markets were being misused. (There is a good analysis of the role of the press in the current issue of Columbia Journalism Review. The article gives me some credit, but it also quotes me on how I missed a story that, in retrospect, seems obvious.)

Mr. Geithner:

The causes of the crisis are many and complex. They accumulated over time, and will take time to resolve.

Governments and central banks around the world pursued policies that, with the benefit of hindsight, caused a huge global boom in credit, pushing up housing prices and financial markets to levels that defied gravity.

Investors and banks took risks they did not understand. Individuals, businesses, and governments borrowed beyond their means. The rewards that went to financial executives departed from any realistic appreciation of risk.

There were systematic failures in the checks and balances in the system, by boards of directors, by credit rating agencies, and by government regulators. Our financial system operated with large gaps in meaningful oversight, and without sufficient constraints to limit risk. Even institutions that were overseen by our complicated, overlapping system of multiple regulators put themselves in a position of extreme vulnerability.

These failures helped lay the foundation for the worst economic crisis in generations.

When the crisis began, governments around the world were too slow to act. When action came, it was late and inadequate. Policy was always behind the curve, always chasing the escalating crisis. As the crisis intensified and more dramatic government action was required, the emergency actions meant to provide confidence and reassurance too often added to public anxiety and to investor uncertainty.

The dramatic failure or near-failure of some of the world’s largest financial institutions, and the lack of clear criteria and conditions applied to government interventions caused investors to pull back from taking risk."

Me:

"But it is not easy to see how we revive the financial system while executing the people who run it."

Sorry Floyd, it's the other way around. Asking these people to revive our system is like asking Wrong Way Corrigan to fly you from NY to LA. This TARP is more like -1.0.

“This is vague,” he points out. No one argues."

It's transparently vague. That counts for success nowadays. Can you say "The losses are being transferred from the bankers to the taxpayers come hell or high water?"