Last night, Barack Obama repeatedly declined to discuss the Financial Stability Plan, because he didn’t want to “preempt” this morning’s speech by Tim Geithner. Hey Mr. President, you can’t steal the thunder from someone who’s carrying a transistor radio with one battery missing.
For starters, Geithner’s optics were awkward. He spoke with a nervous diction reminiscent of a high schooler who’s been asked to recite a Dickinson poem. Eyes darting all over, with a static emphasis on most every word. Then there was an aborted bow at the end, which he’s probably hoping played more like an effort to bend down to pick up papers.
None of that would have mattered, of course, had Geithner provided some actual policy details worth discussing. Instead, he laid out some very broad strokes that anyone with access to the WSJ/NYT/FT/TV/AM/FM already knew.
The public-private partnership idea has been in the public sphere for days, and Geithner provided no specifics to move things along. For example, what types of guarantees (i.e., bribes) is Treasury thinking about providing? What type of ownership percentages would the government like to get on these partnerships? How does Treasury plan to value the toxic assets? Will private equity firms be allowed to purchase these assets with funds backed by public pension funds, or will they be required to raise dedicated pools? Will Treasury be consulting large private equity firms, or is the presence of ex-Blackstone pro Matt Kabaker good enough?
I’m not saying Geithner had to have all of the details today, but a few would have been nice. Something that private investors could bite into and chew on for a while, with the obvious understanding that this is a work in progress.
As it currently stands, we’re no further along than we were before the speech. Most large private equity firms I talk to have theoretical interest in participating in this program, but can’t even dip a toe into the water without having at least minimal visibility into the risk/reward profile.
Even if Geithner had come out with fifty pages of specific details that were amenable to PE firms, it would have taken months for the first transactions to close. With zero pages, we’ll be lucky to see anything actually happen before mid-Q3. Not exactly the “swift” sort of action that Geithner himself says is needed…