With few bailout details, Dow plunges 381 points

Richard Drew/AP
Traders on the New York Stock Exchange sent shares tumbling Tuesday after Treasury Secretary Tim Geithner offered a vague outline of his bank bailout plan.

Outlining an aggressive-sounding but vaguely detailed financial bailout plan, Treasury Secretary Tim Geithner sent markets tumbling Tuesday morning. After that, nothing could lift Wall Street's gloom.

Not Senate passage of the stimulus package. Not Mr. Obama speaking about the package in Fort Myers, Fla. Not Fed Chairman Ben Bernanke testifying on Capitol Hill.

The Dow finished Tuesday down 381.99 points to 7888.88 – moving within 350 points of the lows set in November.

Deep skepticism

Why so glum? Partly, perhaps, because investors worry that the plan doesn't go far enough; but mostly because the outline is too vague to alleviate deep concern about the fragility of the system and skepticism that government has its hands around the problem.

Compared with the rescue efforts last fall, "our challenge is much greater today because the American people have lost faith in the leaders of our financial institutions, and are skeptical that their government has -- to this point -- used taxpayers' money in ways that will benefit them," Mr. Geithner said in his Tuesday morning speech. "This has to change."

Geithner was speaking about the public but he could have been talking about investors.

Investors key part of plan

Yet these investors will be key to recovery. The administration hopes to leverage federal dollars with a much larger investor response – some $1.5 trillion of private-sector money.

Since Day 1, the Obama administration has been talking about the need to move speedily.

The market is saying: Enough already, show us the plan!

The coming days will determine whether the administration has gotten the message.

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