http://news.yahoo.com/s/ap/20090210/ap_on_bi_st_ma_re/wall_street

NEW YORK – Investors are frustrated with the government's latest bank bailout plan — and showing it by unloading stocks.

The major stock indexes fell as much as 5 percent Tuesday, including the Dow Jones industrial average, which tumbled 400 points. Financial stocks led the market lower, reflecting Wall Street's growing concerns about the government's ability to restore the health of the banking industry.

Traders and investors said the lack of specifics from Treasury Secretary Timothy Geithner on how the government would direct more than $1 trillion in public and private support was troubling.

The plan is aimed at restoring proper functioning to credit markets, which seized up over worries about bad debt after the September bankruptcy of Lehman Brothers Holdings Inc. The latest plan calls for a government-private sector partnership to help remove banks' soured assets from their books.

The plan also would boost an effort to unclog the credit markets that govern loans to consumers and businesses. Funding for the effort would jump to $100 billion from $20 billion.

"The good news is they are going to spend a trillion dollars, the bad news is they don't know how," said James Cox, managing partner at Harris Financial Group.

"They built this up as being a panacea," he said. "There was so much hope pinned on them to do a good job. The expectations have been so high. It's hard to live up to."

Investors also questioned whether this plan, which followed previous efforts in the final months of 2008, would work. Some selling was to be expected, however, as stocks rose sharply last week ahead of the announcement.

Geithner's speech "basically puts a spotlight on the fact that the government has no idea how to fix the problem," said Jeff Buetow, senior portfolio manager at Portfolio Management Consultants. "People bought on rumor and hope, and now they're selling on reality."

Investors focused on the financial rescue showed little reaction to the Senate's approval of its $838 billion economic stimulus package. The bill must now be reconciled with an $819 billion version passed by the House. Congressional leaders hope to have the bill on President Obama's desk before a recess next week.

"The economy is in deep trouble. The stimulus plan is not very stimulative. It's not addressing the real problem," Buetow said. "We have an insolvent financial system. The government is trying to find a comprehensive way to save it. They can't afford to just throw money at it. That's what they tried to do in the fall and that clearly did not work."

Stocks extended their slide after Federal Reserve Chairman Ben Bernanke didn't elaborate on the plan in testimony at a House Financial Services Committee hearing. Instead, Bernanke said the programs designed to revive the credit markets are showing promise and that any fix to the worst financial crisis since the 1930s would take time to work.

In late afternoon trading, the Dow industrials fell 402.94, or 4.87 percent, to 7,867.93.

Broader stock indicators also tumbled. The Standard & Poor's 500 index fell 45.51, or 5.23 percent, to 824.38, and the Nasdaq fell 67.86, or 4.26 percent, to 1,523.70.

The Russell 2000 index of smaller companies fell 21.91, or 4.68 percent, to 446.03.

Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 1.19 billion shares.

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Geitner could have created a governmental entity run by private counsel for a flat % rate to start buying from the banks homes that have been foreclosed and also homes in the process of foreclosure. Many of these foreclosures maybe could be prevented with loan adjustments of some kind by the government. I know there are value problems but there has got to be people qualified to value them. At least the taxpayers would have a piece of property and an interest payment would come with some of the properties. As it has been, I don't see taxpayers getting anything.

Geitner's plan announced today has a big flaw, maybe. Why would private investors team with the government to take on the risk when at any time the government could change the rules if things went downhill?

A lot of capital needed by businesses to provide jobs left via Wall Street today. Jobs will follow.

Let's hope savy investors can get the guarantees they will need to co-capitalize with the government to buy up these mortgages since that is the direction Obama decided on. I don't like that solution because investors get any upside and taxpayers are taking all the risk. But something has to be done to get these mortgages off the banks books so they will lend.

Republican party has made this economy sick.
Democrat party will withhold the medicine and supply plenty of poison.

I'm a bit confused as to how to fix the economy. What do you think would work, nogames?