Stocks soar on Obama bank plan

The Dow climbed 497.48 points, a 6.8 percent gain, to close at 7775.86 on Monday in the biggest one-day jump since October. The stock market rose after a two-week stretch of relatively solid performance, following weeks of battered stock prices.

Last week the stock market rose after the President and the Treasury Department announced the new Homeowner Affordability and Stability Plan, which the administration says will keep people in their homes and stabilize the mortgages that underlie the assets involved in the financial crisis.

The White House said the newest plan -- which involves using public and private funds to buy up toxic assets to clear up the balance sheets of troubled financial institutions -- would "unlock the credit markets, one of the most complex and intractable obstacles to economic recovery."

In an op-ed in the Wall Street Journal, Geithner explained how the plan will work, and President Obama told reporters about the plan after receiving his Economic Daily Briefing in the Roosevelt Room of the White House Monday morning.

"Our new Public-Private Investment Program will set up funds to provide a market for the legacy loans and securities that currently burden the financial system," Geithner wrote in the Journal.

He said the program will purchase real-estate related loans from banks and securities from the broader markets and give banks the ability to sell "pools of loans" to dedicated funds, and allow investors to compete to participate in those funds and take advantage of the financing provided by the government.

Speaking at the White House, President Obama described the plan as one leg in the stool of economic recovery, but he said recovery is "not going to happen overnight" because of "great fragility" in the financial systems.

"But we think that we are moving in the right direction," Obama said. "And we are very confident that, in coordination with the Federal Reserve and the FDIC, other relevant institutions, that we are going to be able to not only start unlocking these credit markets, but we're also going to be in a position to design the regulatory authorities that are necessary to prevent this kind of systemic crisis from happening again."