So, Timothy Geithner has unveiled the Bank rescue plan.  Judging from today's soaring stock prices, Wall Street is pleased as punch with Geithner's plan.  If Wall Street is happy with the plan, it can only mean investors have concluded troubled banks are going to be treated with kid's gloves.  Quite a few economists have argued that the bank mess can't be solved until the clearly insolvent banks are nationalized.  Yet, Geithner has spurned such advice, and has concocted a plan that has Wall Street cheering.  It is another example of a corrupt system overtly favoring Wall Street over the ordinary taxpayers.

Obama better hope Geithner's plan jolts the credit markets to life.  Yet, it wouldn't be surprising if it fails miserably.  Even if the banks are desperate to lend, the deepening recession has sent confidence plummeting, which means the banks won't find too many risk takers out there eager to expand a business in this rough environment.  Because of record low interest rates, some life may return to the housing market.  And it wouldn't be surprising if a spate of mortgage refinancing activity emerges because of unbelievably low interest rates.  Yet, it is hard to imagine that will be enough to resuscitate the sick economy.

Let's not waste time predicting whether Geithner's plan will work.  No one really knows if the Geithner plan will restore a vestige of normalcy in the credit markets.  That doesn't mean we can't critique the plan.   Even if the Geithner strategy does somehow miraculously get banks lending again, it is hard to justify subsidizing private investors to entice them into buying the toxic assets of banks.  The hope lies in spurring interest in the banks' toxic assets(by lending private investors money), so their values rise.  If that were to happen, this would give a boost to the troubled banks.   It sounds good on paper, perhaps.  But, it is also a terribly convoluted plan that is almost impossible to justify on any level.  Reckless banks have already received massive injections of capital from government(which ultimately comes from taxpayers), so another scheme drawn up to help the banks avoid tough medicine seems particularly unfair.  It is hard not to conclude Geithner is too wedded to the banking interests to responsibly manage the banking crisis. 

There is a danger to Obama here too.  Obama rode to the White House offering change.  Taxpayers are losing patience with the seemingly endless bailouts that are protecting institutions that have demonstrated shocking recklessness.  And now Obama's Treasury Secretary has crafted a Bank Rescue Plan that is overly favorable to Wall Street.   If Obama doesn't handle this potentially explosive situation deftly, he risks a huge hit to his credibility.  

The Geithner bank rescue plan announced today brought an outpouring of irrational exuberance to Wall Street.  This is not a good sign.  With the Geithner plan seemingly tilted in the favor of the same charlatans that engineered the financial crisis and with billions of dollars already injected into the greedy institutions, it must be asked is there any end to Wall Street Favoritism.