Source: http://tpmdc.talkingpointsmemo.com/2009/03/dems-giving-geithner-time-as-pelosi-opens-door-to-another-bailout.php
March 10, 2009
Treasury Secretary Tim Geithner spent two hours behind closed doors last night with House Democrats. He told lawmakers that the economic crunch would get worse before it gets better, either later this year or early next year, while vowing action on small business lending.
What Geithner didn't mention -- but what House Speaker Nancy Pelosi acknowledged today after a forum with several leading economists -- is that more taxpayer money is likely to be needed to shore up foundering banks.
After economist Mark Zandi of Moodys.com told reporters that "another stimulus package is a reasonable probability, given the way things are going" and that "more money for financial stability to shore up the banking system is likely," Pelosi said she agreed with his statement.
But can Democrats find the votes to push through another round of capital for the banks, should the Obama administration ask for one? House Financial Services Committee Chairman Barney Frank (D-MA) said on Thursday that "it's not clear that the political support would be there to" approve another infusion aimed at loosening stalled credit markets, although several Democratic senators said today that they were giving Geithner the benefit of the doubt as he works to handle the conflagrations in the housing markets, credit markets, and bank balance sheets.
"We've got to reinstate people's faith in the system ... I'll give him enough room to do his job," Jon Tester (D-MT), a member of the Senate Banking Committee, said when asked about Geithner's plans to put off broader financial regulation that had been expected by next month.
"I'm confident that they have a sense of the challenges and confident that they're on the right track," Sen. Bob Casey (D-PA) said. "But still, I think, no matter who it is ... there's still going to be some trial and error. There's no one alive in America who knows exactly what to do. There are still going to be some difficult days."
Much of the recent roller-coaster ride in Washington has come as lawmakers watch the stock market, with President Obama likening its ups and downs to a campaign tracking poll -- a remark that drew heated condemnations from Republicans.
Sen. Dianne Feinstein (D-CA) admitted that she was "surprised at the continual drop in the market, in view of the economic stimulus in particular."
But Sen. Ben Nelson (D-NE), a potential thorn in the administration's side on several key issues, gave the Obama team the benefit of the doubt on the markets. Nelson told me that the health of the Dow is not "the indication that the program the secretary's pursuing is successful or not," but rather "a measure" of Geithner's ability to calm the economic waters.
"I'm looking for an alternative," Nelson added, "and the other side's not offering an alternative. So [Geithner's approach] may be the only game in town."
Meanwhile, senior Democrats are doing all that they can to help brighten the nation's economic outlook. The Dow rallied higher after Frank told reporters that he expected the SEC to reinstate the "uptick rule" on short-selling in stocks, and the Financial Services Chairman even threw a bone to conservatives who decry mark-to-market accounting rules. Frank told reporters that
[T]he mark-to-market rule has clearly got to be made better in its workings. There has to be more flexibility in its application. There has to be discretion in what the consequences are.
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