President Obama Walks into New Bank Crisis

While President Barack Obama was being sworn in, Wall Street was free falling. Bank stocks continue to inject fear into the market as toxic mortgage assets continue to force large write downs and stockpiling capital into reserve provisions.

Startling reports from State Street of a 71 percent drop in fourth-quarter profits sent bank equity indices tumbling. State Street, a custody bank with little exposure to mortgages was seen as stable in the ongoing economic downturn.

Re-surging challenges in the banking sector have pulled the Dow back under 8000. This means Obama's first full day in the Oval Office is going to be full of questions about lending, TARP, and bank bailouts.

He has, freshly in hand, the remaining $350 billion of TARP rescue funds. In addition, there is momentum behind another $825 billion "economic recovery" package expected to expedite its way through Congress. The big question is, "where will it all go?"

Obama spoke of a new era of accountability and responsibility during his inauguration speech. Those words are likely to echo again today as Timothy Geithner, US Treasury nominee goes before the Senate Finance Committee. He is likely to suffer the scrutiny of his predecessor's TARP expenditure, which he participated in as the President of New York Federal Reserve.

Democratic leadership, like Barney Frank (D-MA) are demanding accountability and direct allocations for foreclosure prevention. Two demands that looked appropriate until banks began to teeter on crisis again. Now, this historic monetary expansion seems all the more complex and uncertain.

Despite lowering expectations and grounding his inauguration rhetoric, Obama is greeted today with real decisions. All those who were inspired by his words await his first actions.