This is a rush transcript from "The Journal Editorial Report," March 28, 2009. This copy may not be in its final form and may be updated.
PAUL GIGOT, FOX HOST: Up next on "The Journal Editorial Report," Tim Geithner's new bank plan. He needs private partners to make it work. But will Washington's assault on Wall Street make bankers think twice before getting on board?
And the Obama agenda — health care, taxes, cap and trade, union organizing. How much of this is running into trouble?
Plus, conservative Catholics get their Irish up over Notre Dame's choice of a graduation speaker.
"The Journal Editorial Report" begins right now.
Welcome to "The Journal Editorial Report." I'm Paul Gigot.
Treasury Secretary Tim Geithner unveiled his long-awaited plan to buy up bad bank assets this week. The program would create a public/private partnership to take up to $1 trillion of toxic paper off the books in the hopes of unfreezing credit markets. But after weeks of Wall Street bashing in Washington, will potential investors think twice before getting on board?
Joining the panel this week, Wall Street Journal columnists Mary Anastasia O'Grady, Holman Jenkins and Kimberly Strassel.
Holman, President Obama invited the biggest bankers to the White House on Friday hoping to sweet talk them into cooperating. But after all the AIG fiasco of the last couple weeks, can they win them back?
HOLMAN JENKINS, COLUMNIST: I'm not sure sweet talk is all that they got. I think they probably were reminded who is the boss, too. After all, he stands on top of the regulatory apparatus that decides whether these banks are solvent or not. So he has a lot of pressure points on them to get them to help him make this plan a success, which is at least get some transactions going, get these assets off their balance sheets.
GIGOT: So he can say we're not here to punish you, but in the background is we may have an offer you can't refuse?
JENKINS: Absolutely. I think also he's setting the stage down the road, if this doesn't work out, if the economy doesn't heal, the bankers go back to being the enemy pretty quickly.
GIGOT: Mary, can the Geithner plan work? The stock markets really liked it or seemed to.
MARY ANASTASIA O'GRADY, COLUMNIST: I think the stock market might have been up for other reasons as well. There was good February housing data out. I think there was some short-covering that went on. And I think that people were also happy that Obama did a climb-down from his angry rhetoric against the banks. But I think this can get the private investors buying these assets.
GIGOT: At least bidding on them?
O'GRADY: At least bidding on it. He's sweetened the deal. The hedge fund managers say the assets are worth "X" and the banks say they're worth something much more. There's a big gap. And we have to discover what the price is. Basically, what the government is going in and doing is saying to the hedge fund managers, here's a bunch of money for you to bid up to the price closer to what the banks say they're worth.
GIGOT: This is a very good deal if you want to bid. They have guaranteed money from the FDIC, leveraged at 6 to 1. You put up a buck, the Fed puts up a buck. You have some down side risk but very small.
JENKINS: All you can lose is a buck. But even if the assets go up just a little bit, you can double, triple, quadruple your money quickly.
The question is can you keep that money. At the end of the day, if Congress says, look at all this money these people made, the taxpayers got shafted. There are all kinds of clawbacks. We can hit these people with taxes. We can find ways to punish them. That's what makes people reluctant to go into the deal in the first place, sweet as it is.
GIGOT: So the bid prices...