Credit Question

This is Treasury Secretary, Timothy Geithner's, plan to reestablish the flow of credit to the American consumer:

http://online.wsj.com/article/SB123776536222709061.html

It is written in plain English and not super long.

Basically, he says that he wants to bring mortgage rates down and get consumer and small business lending going again.

My thoughts are a) aren't the "near historic" low rates what got us where we are today? b) I hope the securities backed by SBA loans bought by the Fed were priced correctly (the SBA has proven incompetent at funding legitimate businesses in the past) c) we may have seen a rise in refi's this month, but I know two people, a coworker and a coworker's friend who refied just because it made sense, not because it was saving them from financial distress d) I think the securitization number was so high because Timmy gave a signal that at least in this program he would not completely screw private investors (b/c he needed them), so of course there is a market for AAA rated debt paper e) I don't see how the Public-Private Investment program will work for old assets because banks still will not want to sell for the prices that the PPIP should be willing to pay f) is credit really constrained to working families and businesses?

The last point is what I am most interested in. I know some of you own small businesses. Has anyone out there had his or her personal or small business access to credit lessened in the last several months? This is similar to my question regarding foreclosures in mature neighborhoods. With the credit question, I do think I will receive some "yes" responses, but I believe on a much lower scale than the pols and media would have us think.

All Tim needed to say to get securitizations going again (and loosen up credit, which is what all the back patting in DC seems to be about) was to incentivize, temporarily, investors to take the risk they were afraid to take. It is a fact that securitization markets have been closed since Fall of 2007. But if some of the same private investors that Timmy brags about in this op ed were given a tax break on gains from securitization for X amount of time, I am sure they would have come out of the woodwork sooner to buy AAA paper without the Fed needing to make any loans (take any risk itself). Private investment capital has and is afraid of getting burned by government's bumbling - see the clean energy industry - and that needs to change.

-2outof4