Obama Week 10: Rescue gains steam
The administration forges ahead on its bank rescue and regulation overhaul as Congress mulls the budget. Next week's agenda: G20 meeting and automaker bailout.
NEW YORK (CNNMoney.com) -- The Obama administration's tenth week in office was a busy one. Treasury Secretary Tim Geithner unveiled the next phase of the bank bailout. Congress took up the president's budget. And the government outlined a plan to overhaul regulation of the financial system.
The administration's efforts, along with some faint signs that economic conditions are stabilizing, helped improve the sentiment on Wall Street. Stocks posted strong gains for the week despite a selloff on Friday.
It was also a busy week on Capitol Hill.
Committees in the House and Senate largely supported Obama's priorities for the 2010 budget, with certain caveats, in the early stages of what is expected to be a months-long debate.
Lawmakers also heard testimony from Geithner on how the administration hopes to prevent future meltdowns by increasing oversight of the financial markets and preventing companies from growing too big to fail.
Meanwhile, the president continued to promote his long-term economic agenda, stressing the need to invest in health care, education and energy.
In a new rhetorical tack, Obama sought to draw a direct connection between his budget proposal and the broader themes of economic recovery and future growth.
"This budget is inseparable from this recovery," Obama told reporters Wednesday night. "It is what lays the foundation for a secure and lasting prosperity."
To promote his message, the president took a number of unconventional steps. He published an op-ed in more than 30 newspapers around the world, held his second prime time news conference, and broke technological ground with an online town hall meeting at the White House.
The flurry of activity comes as the president prepares to meet with world leaders at the G20 gathering of major economies next week in London. Obama is expected to address concerns over his economic policies with the leaders of China, Russia and India, among others.
Also next week, General Motors (GM, Fortune 500) and Chrysler LLC. will give Congress an update on their plans to become economically viable. Obama has signaled his willingness to give the automakers more aid, on top of the billions of dollars in federal loans they've already received, if they are willing to make the concessions required by the government.
100-day scorecard: Week 10. CNNMoney.com will continue to track Obama's first 100 days in office and keep score of the government's unprecedented efforts to fix the ailing economy. (Last week's article is available here.)
Bad assets: On Monday, Treasury Secretary Tim Geithner officially unveiled the administration's long-awaited plan to tackle the financial crisis by absorbing troubled bank assets.
Under the new so-called "Public-Private Investment Program," tax dollars will be used to seed partnerships with private investors to buy toxic assets, such as subprime mortgages and other loans.
Banks have reported massive losses on these assets and the government hopes its new program will take some of the pressure of the financial system and encourage lending to consumers and businesses.
The program aims to buy $500 billion of existing assets and loans, but could be expanded to $1 trillion, the Treasury Department said.
Wall Street cheered the plan, with the major indexes on Monday posting their biggest gains of the year. It was something of a vindication of Geithner, who had struggled to gain Wall Street's respect after his initial bailout plan was criticized for being too short on detail.
Obama touted the program in Wednesday's press conference, reiterating his belief that stabilizing the financial system is a crucial part of his three-part plan to restore economic prosperity.
"We will continue to do whatever is necessary in the weeks ahead to ensure the banks Americans depend on have the money they need to lend, even if the economy gets worse," he said.
Budget: The debate over Obama's $3.6 trillion budget outline got under way this week on Capitol Hill.
Budget committees in both the House and the Senate passed leaner versions of the plan this week, but the proposal will undergo several more votes before a final version is approved.
While Democratic lawmakers supported the spirit of Obama's ambitious fiscal agenda, members of Congress from both sides of the isle expressed concern about expanding the national debt.
Among the potential sticking points: the president's proposal to make permanent tax credits for low and middle-income earners, new funding for health care and an energy initiative known as cap-and-trade.
Obama has repeatedly called for increased investment in health care, education and energy. Making these areas a priority now will lead to future economic prosperity, he says.
"At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led us to a narrow prosperity and massive debt," Obama said. "It's with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and invest."
Financial oversight: The administration also spent the week arguing for sweeping new powers to oversee the financial markets in order to prevent a repeat of the current crisis.
Obama and Treasury Secretary Tim Geithner both called for new legislation that would give regulators the power to "resolve" big financial firms the way the Federal Deposit Insurance Corporation liquidates failed banks.
The authority is necessary to deal with non-bank financial companies like insurance giant American International Group (AIG, Fortune 500) that pose a "systemic risk" to the overall economy, they said.
Geithner went before Congress Thursday to argue for tough new rules aimed at previously unregulated corners of the financial markets, such as hedge funds and derivatives trading. He also said the nation needs a single risk auditor to oversee big financial firms.
Week 8: Obama: 'I'm very confident' we'll be OK
Week 7: Obama pushes - and gets pushed
Week 6: Obama thinks big in budget
Week 5: It's law. Now on to budget
Week 4: Obama gets his bill
Week 3: Bank bailout overhaul
Week 2: Stimulus debate heats up
Week 1: Pitching the recovery plan