Stocks Tumble as Bailout Plan Is Unveiled

Stocks Tumble as Bailout Plan Is Unveiled
from CNBC

US stocks fell sharply Tuesday in a broad-based decline as the government announced details of its latest bailout plan.

The Dow Jones Industrial Average was down about 70 points, then lost another 100 in a matter of minutes — before even any official government announcement.

Stocks continued to slide as Treasury Secretary Tim Geither revealed details of the bank-bailout plan. CNBC will interview Geithner after his speech, at noon. Then he's on to Capitol Hill, where he will testify before a House panel.

Some market pros said the market selloff was simply a case of buy on the rumor, sell on the news.

The "Financial Stability Plan," as it's now called, consists of four main components:

1) It will set up a public-private fund to mop up to $500 billion of spoiled bank assets.

2) It will set up a consumer-lending facility to support up to $1 trillion in new lending.

3) It will devote up to $50 billion to help stem home foreclosures.

4) It will provide new funding to banks after a "stress test" to determine if the bank is healthy.

Some market watchers remain skeptical over the benefits of the plan and legendary investor Jim Rogers told CNBC it could even make things worse. The bailout will plunge the US further into debt and it is designed by the same people who failed to forecast the crisis in the first place, Rogers said.
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