David Cho and Lori Montgomery of the Washington Post give the lowdown on Treasury Sec. Tim Geithner’s $1.4 trillion plan to rescue banks. Unfortunately the Treasury Dept. is working with $350 billion — the second-half of money in the bailout bill. Geithner said today that additional cash could come from other government agencies, the Federal Reserve and even private investors.

As for the substance of the plan, Geithner wants to spend $500 billion to persuade investors to buy toxic assets from banks (as opposed to the government directly buying assets). He seeks to "unclog the market" for student loans as well auto and other consumer loans. And he proposes to bank-by-bank looks at the books of each lending institution and then determine what banks need a direct government cash infusion. Figuring this out will "require the nation’s bank regulators to work together."

It’s not necessarily bad Geithner wants to spend so much money, though how he is going to get Congress to approve it isn’t clear at all. Geithner will have to better explain why he will do a better job handing out money to banks than his predecessor Henry Paulson did.

Another issue that Cho and Montgomery wisely focus on is whatever happened to stemming the foreclosure rate. The idea of Wall Street Bailout: Part II was that it was supposed to be about homeownership assistance. This particularly became the case when Obama was elected president. But James Lockhart, director of the Federal Housing Finance Agency, said that a plan to help homeowners has taken longer to formulate than other parts of the bailout. With Treasury already so over budget, it seems possible that panicked homeowners will be squeezed.-MB

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