Local reaction to Obama’s latest bank rescue plan

The Obama administration is pushing a new way to free up lending for consumers and businesses.

The plan could lead to the purchase of as much as $1 trillion of toxic assets. President Barack Obama calls it another "critical element" to reviving the U.S. economy.

President Barack Obama expressed confidence that the latest bank rescue plan will work to free up credit, saying the nation now has "one more critical element" in a multi-pronged effort to help the economy recover.

Today, I spoke with Baxter Hahn, Managing Director for Wachovia Securities of Florence. He told me Wall Street appears optimistic with today’s news, but they are cautious in their level of optimism. One concern he says investors have is that the full details of the plan have not been released, and there’s always concern that those plans will change.

Hahn says the question is, “Is it going to free up the consumer and get them back into their spending habits of old. I don’t think it’s going to happen. We’re shifting from a consumer spending society, to a saving society. We are all cautious that times can get tough, so we better start saving. So, no matter what they do to free up the credit, consumers are still cautious of their habits of old.”

He told me because the recession has been so deep, and 401-K’s have been hurt so badly, consumers may be cautious about taking on more debt. “I think if I was planning my 2009- 2010 budget, I would plan around a very cautious consumer. If this (meaning Obama’s new plan) doesn’t work. I don’t know of any plan that will work. We’ve got to give this a shot.”

Hahn says the only thing Wall Street wants a game plan. He says what they don’t like is uncertainty, and they can’t structure portfolios without knowing a plan. Hahn tells me buyers won’t come into the market, until they know the rules. He says slowly we’re starting to see the rules.

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