Dow up nearly 500 points on bank plan
On Day 1, Wall Street gave Obama's toxic-assets plan a huge thumbs up.
It was a roar of confidence from the money crowd as Treasury Secretary Timothy Geithner started up the economic-recovery vehicle.
The S&P 500 index closed above 800 for the first time in more than a month. The Dow Jones Industrial Average soared 497 points to close at 7775.86 – its biggest rally of the year. The NASDAQ closed up 98.5 points to 1555.77.
Now that Wall Street is so enthusiastic, will it get out and push?
Private investment key
That's right. As massive as it is, the Public-Private Investment Program – or PPIP, for short – will need even bigger investments of private capital to get anywhere. Banks will have to be willing to sell their troubled assets. Investors will have to be willing to buy them.
It's the only way the federal government can turn its initial $75 billion to $100 billion investment into a $500 billion to $1 trillion program that can clean up a substantial portion of the banks' troubled assets.
(What's the biggest potential weakness of the program? Click here.)
Uncle Sam your partner?
The plan envisions large investors buying up the assets with the government as a 50 percent partner. That way the private sector sets the price; taxpayers reap half the benefit from any investment gains in the future.
Sounds great. Whether it works will be determined in the weeks ahead.
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