WASHINGTON — Treasury Secretary Timothy F. Geithner, rebuffing criticism of his bank bailout plan for not providing significant details, told lawmakers on Wednesday that the administration would move swiftly to complete its work on the plan.
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In a second day of hearings in the Senate, Mr. Geithner said he was sympathetic toward Wall Street’s craving for more information but said that a rushed plan would be more costly and less credible, and might require expensive revisions that would damage its credibility.
“I understand the desire for details and I understand the disappointment about the lack of details,” Mr. Geithner said, departing from his prepared remarks in a three and a half hour appearance before the Senate Budget Committee. “But part of the disappointment is because people were hoping that we do things that, in my judgment, would have been too generous and not responsible for the taxpayers’ money.”
On Tuesday, Mr. Geithner committed to flooding the financial system with as much as $2.5 trillion from the Federal Reserve, the Treasury and private investors as part of a plan to restore banks and financial markets to health.
The plan calls for the creation of a program financed jointly by the government and investors to buy up to $1 trillion in rapidly deteriorating assets held by banks.
It also called for the Fed and Treasury to expand, possibly up to $1 trillion from $200 billion, an existing program to thaw consumer and business credit markets.
A third component would make more capital available to banks, after subjecting them to a stress test to determine which banks can weather a serious economic downturn.
The final leg of the plan would use $50 billion of the remaining $350 billion in the Troubled Asset Relief Program to help arrest housing foreclosures, though details were scanty.
The Dow Jones industrial average, which plunged nearly 5 percent on Tuesday after the announcement of the proposal, recovered only slightly on Wednesday, closing up 50 points, or about 0.4 percent.
Administration officials and lawmakers briefed on the plan gave several explanations for the delay in completing the work. Foremost among them was that Mr. Geithner had been in office for only two weeks and much of his economic team has yet to be nominated and confirmed.
They said that Mr. Geithner wanted to take the time to carefully design each piece of the plan, mindful that repeated course changes by the Bush administration had rapidly undermined the credibility of his predecessor, Henry M. Paulson Jr.
Moreover, among those officials in place, there remained significant disagreement about some crucial elements of the plan. Reflecting that tension, some financial specialists said that the plan, as outlined, sought to walk a fine line between working with Wall Street and imposing tougher constraints on it.
“Are you going in with the bankers or are you being tough with bankers?” asked Simon Johnson, a professor of economics at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund. “Geithner was being ambiguous about that.”
“They don’t want to upset the banking industry,” he added, “and that’s the heart of it.”
Democratic and Republican lawmakers on Wednesday repeated their concerns about the failure of the administration to move more quickly.
“Many of us were looking forward to a plan that could be presented in a straightforward, clear and detailed way,” said Senator Jeff Sessions, Republican of Alabama, at a hearing before the Senate Budget Committee. “Unfortunately that is not what we received yesterday. At least that’s not what the markets and the country perceived they heard.”
But Mr. Geithner said that it would be a worse policy to move too precipitously.
“I do not want to compound the mistakes of the last 12 months, when things were rushed out before they were ready, and strategy had to be adapted because of that,” he said. “If that means that there is going to be disappointment with the level of details until we get it right, I will live with that disappointment because it is better than the alternative.”
