“Our challenge is much greater today because the American people have lost faith in the leaders of our financial institutions and are skeptical that their government has – to this point – used taxpayers’ money in ways that will benefit them. This has to change.”
— Treasury Secretary Tim Geithner in a speech introducing the Financial Stability Plan. Geithner said that the government will “require banking institutions to go through a carefully designed comprehensive stress test, to use the medical term. We want their balance sheets cleaner, and stronger.”
He added, “We will have to try things we’ve never tried before. We will make mistakes. We will go through periods in which things get worse and progress is uneven or interrupted.” But, echoing President Obama’s urgent pleas to Congress to pass the stimulus package, Geithner stressed the need to act: “There is more risk and greater cost in gradualism than in aggressive action.”
The market wasn’t convinced. The Dow dropped 382 points, or 4.6%, closing at its lowest level since Nov. 20. Many experts had believed that Nov. 20 was the low of the bear market. Maybe not, after all. — Jessica Shambora
