Update: The Senate just passed the Economic Recovery and Reinvestment Act (Jobs-stimulus bill) by 61-37.

After giving a speech designed to reassure markets and the banking industry, Secretary Geithner must be disappointed by the market’s initial reactions. Via the NYT, here are the major components:

— A new program, jointly run by the Treasury and the Federal Reserve, with financing from private investors, to buy up hard-to-sell assets that have bogged down banks and financial institutions for the past year. The program, often described as a “bad bank,” is expected to spend $250 billion to $500 billion.

— Direct capital injections into banks, which would come out of the remaining $350 billion in the Treasury’s rescue program.

— A vast expansion of lending program that the Treasury and Federal Reserve had already announced, which is aimed at financing consumer loans. The two agencies had originally announced their intention to finance as much as $200 billion in loans for student loans, car loans and credit card debt. Instead the program will be expanded to as much as $1 trillion.

A separate $50 billion initiative to enable millions of homeowners facing imminent foreclosure to renegotiate the terms of their mortgages is to be announced next week. . . .

It will also renew a legislative proposal giving bankruptcy judges greater authority to modify mortgages on more favorable terms to borrowers and over the objections of banks.

More details are available at the website for FinancialStability.gov [pdf].

Geithner seems to have been counting not only on the assurances his mostly non-punitive measures gave the market but also on the sheer magnitude of the effort. But so far, the markets are not impressed:

The stock market, which had been trading down all morning, fell sharply after Mr. Geithner spoke. By 11:45 a.m., the Dow Jones industrial average was down more than 280 points. The broader Standard & Poor’s 500-stock index fell more than 3.6 percent.

Every sector of the market was trading lower, with the Standard & Poor’s financials index falling the most, reflecting uncertainty about the banking system and how the government’s latest plans would affect major financial companies. Shares of Bank of America slid more than 5 percent, and Goldman Sachs and Morgan Stanley also fell.

[As of 12:30 Eastern, the Dow is now down 275 points — about 3.3%.] Listening to coverage on CNN and elsewhere, I was struck by how underwhelmed everyone seemed, even though they acknowledged that the numbers being offer should be overwhelming. A trillion here, a trillion there — it doesn’t phase us.

I’m surprised that after Geithner talked about the need for transparency, public input and accountability, and after describing what for many is a very complex program, Geithner gave his speech and immediately left without answering questions. [eCAHNomics reports Geithner appeared on CNBC, and he also talked to NBC’s Brian Williams and others?]

Update II: First reactions: Krugman, Brad DeLong and Reich are also puzzled about how the program works.

Do these people not understand how to roll out a program?

Scarecrow

Scarecrow

John has been writing for Firedoglake since 2006 or so, on whatever interests him. He has a law degree, worked as legal counsel and energy policy adviser for a state energy agency for 20 years and then as a consultant on electricity systems and markets. He's now retired, living in Massachusetts.

You can follow John on twitter: @JohnChandley

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