Justifying his plans is Obama’s toughest ordeal at the moment. He and his team might just be passing through the eye of the needle after Treasury Secretary Timothy Geithner’s faux pas in not being able to avert the multimillion bonuses given to AIG executives. In reality, Obama’s litmus test is convincing people of his preparedness to deal with the crisis. Now, people that need to be convinced are asking Obama and his team to explain the details of their financial plan, especially the part where the trillion dollars are supposed to clean the slate for banks’ toxic assets.

The people are, in effect, saying that for Obama and his team to redeem themselves, their plan has to satisfy the denizens of the US financial industry, their criteria for ‘bad bank’ and ‘toxic assets’ have to be very clear, and that new laws to control bonuses to directors have to be in place right away.

Geithner must now explain what the basic principles of the plan to buy toxic assets actually are before the committee to be held in Congress this week. The press speculated that the long-awaited plan will have the Federal Deposit Insurance Corporation (FDIC) provide low interest loans to buy these assets and sell these to potential outside investors who are interested in buying mortgages. In the process, investment managers need to be hired.

If one looks at it, with the exception of the ‘toxic assets’ that have grown into skyrocketing amounts, there’s nothing new with the new plan. It’s still the same old financial system that ran Wall Street to the ground. So, Geithner will have to spell everything and be convincing.

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Via ABS-CBN News