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NBC's White House correspondent Savannah Guthrie covered the continuing debate over the federal bailout for high finance. "The administration is nowhere near ready with detailed plans for a major regulatory overhaul," she cautioned. Key positions at the Treasury Department have not yet been filled by the transition team. On Capitol Hill, meanwhile, Chairman Benjamin Bernanke "again shot down concerns" that Barack Obama plans to nationalize the major banks. He defined nationalization as wiping out shareholders with the government managing the business. "We do not plan anything like that."
Both CBS and ABC explained the so-called stress test of 19 major banks being launched by the Treasury Department. ABC's Betsy Stark put it this way: "Specifically what happens to banks if the recession drags on into 2010." Those institutions that fail to prove their solvency under such adverse conditions "will have six months to raise money from private investors." CBS called Wyatt Andrews' explainer What It Means. He laid out the specific imaginary stresses: unemployment at 10.3%; real estate prices falling a further 22%; the economy contracting at a 3.3% annual rate.
Failing the test would mean an injection of more federal bailout capital, CBS' Andrews projected: "There are two very big things Treasury officials do not know. They do not know whether, instead of instilling confidence, they may actually undermine confidence in the banks that fail the test. And they do not know if the remaining $350bn in bailout funds will cover what these 19 banks really need."
Anyway, isn't much of that $350bn already assigned to President Obama's foreclosure prevention plan? CNBC's Erin Burnett walked us through that plan as part of NBC's weeklong series Meltdown: Making Sense of it All as her cable channel invited Sheila Bair of the FDIC to a town hall meeting to discuss the housing mess. Later, for NBC's In Depth, CNBC's Jane Wells returned to real estate, introducing us to a house-hunting tour of Chinese millionaires taking in Pasadena, Las Vegas, San Francisco, New York City and Boston. "The tourists are divided between those looking for just the rock bottom prices on foreclosures and those who want to buy near schools so that maybe they can send their children here."
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