From the Washington Post

Geithner Reaffirms $1 Trillion to Clean Up Toxic Assets

Treasury Secretary Tim Geithner, who finished testimony before the Senate Budget committee moments ago, reaffirmed that the cost of cleaning up all the toxic assets clogging the balance sheets of sick financial institutions will be at least $1 trillion.

It is a number Geithner first floated in February and will be made up of some mix of government and private funds.

Sen. Judd Gregg (R-N.H.) pressed Geithner as to whether the government -- meaning, taxpayers -- will guarantee the profits of private investors to lure them into buying toxic assets, but Geithner could not provide a solid answer.

"That depends on the precise structure" of the partnership, Geithner said, but added that "we want to limit the downside exposure of government."

Geithner: Author Smick Is Wrong on Cost of Toxic Assets

12:08 P.M.: Geithner disputed the pricing of toxic assets put forth in a Washington Post opinion piece from earlier this week headlined "Tim Geithner's Black Hole": [The logical alternative -- talk show hosts' solution du jour -- is to temporarily restructure or nationalize the banks and leave taxpayers alone. Remove the toxic assets, replace management and cut the too-big-to-fail financial dinosaurs into smaller, nimbler entities. Then reprivatize these smaller banks and let the recovery begin. Oh, if it were that simple. I suspect Obama's advisers would like nothing more than to dismantle an irresponsible firm such as Citigroup. They are afraid to do so, for one reason: All the big banks are connected to a potentially lethal web of paper insurance instruments called credit default swaps. These paper derivatives have become our financial system's new master.] written by financial author David Smick.

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Fed’s Move Still Shaking Up Markets

The Federal Reserve’s decision to fire up the printing presses to the tune of $1 trillion continued to wash over world financial markets on Thursday, dragging down the value of the dollar and pushing the prices of oil and gold higher.

But on Wall Street, stocks slid into negative terrain, a day after they bounced higher in response to the Fed’s plans to buy up $750 billion in mortgage-backed securities and $300 billion in Treasury debt.

The Dow Jones industrial average opened higher but quickly sagged and closed down 85.78 points or 1.2 percent at 7,400.8, its deepest decline in a week. The broader Standard & Poor’s 500-stock index fell 10.31 points or 1.3 percent to 784.04. The technology-heavy Nasdaq index was off 0.5 percent.

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