The bailouts of late 2008 and 2009 have cost the American taxpayers $61 billion, according to the Treasury Department, but the banks aren't to blame this time. The auto manufacturer bailout, which includes Chrysler and General Motors (GRM), has cost the country more than $30 billion, with American International Group (AIG) consuming another $30 billion.

Meanwhile, Bank of America (BAC) has already made good with the government, and several banks -- such as Capital One (COF), JP Morgan Chase (JPM) and TCF Financial (TCB) -- only have to clean up situations regarding the warrants they've issued. And interestingly, the losses from the bailouts on AIG and auto manufacturers are being offset by profits from the bank bailouts, which could generate additional funds of up to $19.5 billion.

US Treasury Geithner wants to protect his turf. He sent a letter to Nancy Pelosi and Senate Majority Harry Reid extending the Troubled Asset Relief Program (TARP) until October 3, 2010, keeping $550 billion in bailout funds.

His letter states that: "The extension is necessary to assist American families and stabilize financial markets because it will, among other things, enable us to continue to implement programs that address housing markets and the needs of small businesses and to maintain the capacity to respond to unseen needs."

So, I was flipping through some articles in Rolling Stone, when I found a very interesting economic story - yes, in Rolling Stone. The article, "Wall Street's Naked Swindle," takes a look at what happened in the options pits leading up to the death of Bear Stearns and Lehman Brothers. According to the article, an unknown option buyer made "one of the craziest bets Wall Street has ever seen," by shorting Bear Stearns. The unknown trader felt that Bear Stearns would lose "more than half" of its value in nine days or less, a bet that one financial analyst likened to buying 1.7 million lottery tickets.

What is crazy is that this bet paid off, leading to only one conclusion: insider trading (cue dramatic music). When Bear Stearns dropped from roughly $63 to $2 per share on March 17th (just six days later), the person purchasing the options made roughly $270 million. Senator Chris Dodd from the Senate Banking Committee thought that something wasn't on the up and up with this trade, and the Securities and Exchange Commission (SEC) promised it would look into the trade. Of course, nothing has happened since.

A few weeks ago I appeared on CNBC's Closing Bell with Maria Bartiromo to discuss executive pay. One interesting point in the interview was when Ms. Bartiromo argued that it would be difficult to get good people to run big banks if their pay was limited because Wall Streeters are motivated primarily by money. I suggested that if that were true, then you would never see a former CEO of Goldman Sachs Group, Inc. (NYSE: GS) take the enormous pay cut required to become Treasury Secretary.

I am not sure what motivates Wall Streeters to take those pay cuts. But today, another prominent one -- Steve Rattner with whom I worked in the 2004 presidential campaign -- announced he is leaving his private equity firm, Quadrangle Group, and shipping off to Washington to work as Counselor to the Secretary (of the Treasury).

Even though Treasury Secretary Tim Geithner could have made a better impression on Wall Street, the over-reaction to the plan he outlined seems excessive.

In just hours after the announcement, the major indices backed away from the key 20- and 50-day moving average lines and plunged to the bottom of the current trading range. For the S&P 500, the support is at 800 to 820 -- and the index closed just seven points above the top line while the Dow actually penetrated its support line.

It is hoped that Geithner's professorial lecture resulted from inexperience in explaining real issues to the public following an increase of presidential expectations. If that's the situation, then we should see more details and see them quickly.

Three of the major indices have stalled at their 50-day moving averages (the Dow, the S&P 500 and the NYSE Composite), but the NASDAQ is leading the way -- pushed along by successes in the technology sector and, more recently, the financial sector.

In a major market turn, it is common for technology stocks to lead, as in 2003. But the NASDAQ, too, is now at a critical resistance line -- the midpoint (1,600) of its overall range that began in October.

All four of the indices appear to be waiting for the catalyst that will either move stocks higher or bring in sellers for another test of the January lows.

U.S. stock markets are headed for a lower opening as investors await data on jobless claims and housing starts in December. Investors are also awaiting the expected confirmation of Timothy Geithner as Treasury Secretary, despite his admission that he failed to pay some taxes.

The housing market is expected to show little signs of improvement. Bloomberg News says "U.S. builders probably broke ground in December on the fewest houses since record-keeping began as sales and credit dried up, economists said before a government report today. "

Many economists had predicted that the housing market would bottom out this year. Others, such as the pessimistic Nouriel Roubini of NYU, are arguing that the economy is in much worse shape. He expects losses from U.S. financial institutions will hit $3.6 billion.

Shares of Apple Inc. (NASDAQ: AAPL) may jump after the maker of the iPod and iPhone reported better-than-expected quarterly results yesterday. Investors had been spooked by concerns about Chief Executive Steve Jobs' health and weakening consumer spending. The enthusiasm for the company may be tempered by an SEC investigation into how the company disclosed information about Jobs' health.

Conversely, eBay Inc. (NASDAQ:EBAY) posted disappointing results. Growth in the company's core auction business continues to slow as consumers show a preference for purchasing fixed-price items -- if they are in a mood to buy at all. The online auction giant, which already is in Wall Street's dog house, further angered investors by giving disappointing earnings guidance. Pressure may build on the company to boost its share price.

The honeymoon between President-elect Barack Obama and the American people may end about the time crews finish cleaning up from tomorrow's inauguration festivities. For now, the American people and Congress are willing to cut the charismatic politician some slack, especially when it comes to his troubled nominee for Treasury Secretary.

Priority number one for the first African-American leader of the free world is the U.S. economy. It's more important than the war in Gaza, more important than education and more important than the fight against terrorism. The U.S. economy is in its worst shape since the early 1980s. If the slump, which has already lasted 12 months, lingers for more than 16 months than it will equal the Great Depression, according to Reuters.

Obama is well aware of the challenges that lie ahead. CNN reports that he is planning to meet with his top aides Wednesday "to map out how to step up his personal lobbying efforts to get Congress to pass his stimulus plan, which has a price tag of $825 billion."