Some call it ‘cash for trash’, while Morgan Stanley believes it will do some good for the credit markets. Treasury Secretary Timothy Geithner revealed the Obama administration’s plan to help buy up to $1 trillion in bad bank debt. These toxic assets have been weighing heavily on the financial and banking institutions, limiting their ability to loan money and making credit hard to come by for many families. The plan was met with general approval from Wall Street investors, as the Dow Jones industrial average skyrocketed 497 points, making March 23, 2009 the fifth largest single-day point gain ever.

It would be premature to judge or speculate on the impact the Treasury Department’s plan will have on the economy and the credit market, but the plan has given hope to investors. News also came that February saw an unexpected increase in home sales, although prices dropped. Still, some see this as a sign that the housing market is finally stabilizing. From the Obama administration’s plan to offer government incentives to entice private investors to purchase toxic assets from banks, to today’s stock market surge, to news that the real estate industry is showing signs of straightening out, some glimmer of hope seems to be shinning through the jet black cloudy skies that have blanketed the global economy.

It’s still early. One day’s good news is not nearly enough to pull us out of this rut. Most banks are still evaluating the plan and had little to say regarding their plans to participate in the government’s latest financial plan. In an article published on ABC News’ website, they revealed that of the 27 financial institutions asked whether they would take advantage of the program, 10 had no comment on the matter.[1] Others simply regurgitated similar claims that more evaluation, analysis and time would have to be spent before they could commit to selling toxic assets under the plan.

Obama has certainly made good on his promise of ‘Change’ through the first couple months of his administration. The changes, though, come with great risks attached to them and have stirred up criticism among conservatives, and even some moderate liberals. Whether or not these changes pay off in the global and domestic economy is yet to be seen. We should not yet make premature assumptions or predictions that will end up hurting us in the future. Proceed with caution, but be hopeful.


[1] Stark, B. (2009, March 23). Dow Soars as Investors Back Bad Asset Plan. Retrieved from ABC News: http://www.abcnews.go.com/Business/story?id=7153525&page=1

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