Geithner's Bank Plan Led To Hasty Goldman Meeting

How worried was Wall Street about a lack clarity in Treasury Secretary Tim Geithner’s plan to save the banking system through the purchase of toxic debt? So worried that Goldman Sachs called a meeting to figure out how to fix the problem.

—This meeting known as the "Goldman Sachs rountable" took place just hours after Geithner’s speech (and the dismal market reaction) on Tuesday at the headquarters of Goldman Sachs (NYSE: gs) in lower Manhattan.

—Around 20 of the firm’s biggest hedge fund and private equity clients from around the country showed up—a testament to just how concerned financial industry insiders are about what few details geithner presented.

—They included representatives of KKR, Fortress Investment Group(NYSE: fig), Bain Capital, Perry Capital, Capital Research, Putnam and Citadel.

Goldman sachs says the meeting was planned well in advance. But people who attended tell CNBC that they received the invitation after the speech and decided to attend because of the speech. Goldman Sachs initially denied that the meeting, hosted by co-presidents John Winkelried and Gary Cohn, took place.

Here are some of the upshots from that meeting:

1. While it is better to wait for a good plan as opposed to quick and dirty bad one, time is important. What the group concluded was that the longer the plan takes to produce, the more diffucult the situation becomes. That's because reviving the securitization market is key toward reviving the economy and it’s a viscious cycle — the longer it takes to revive securiziation, the worse the economy becomes and securized product held by the banks lose more value.

2. Ken Griffen, the founder of Citadel, stressed the need not merely to fix the prices of the securitized bonds, but also that any plan must stabilize the root cause of the problem — the mortgages themselves. And he came up with several ideas to spur homeownership that could revive the housing market.

3. Also some worry over speculation that Paul Volker doesn’t have a more formal role in the process of coming up with a bailout plan.

4. Some actually had met with officials at the New York Federal Reserve after Geithners speech and were told the plan is still weeks away. That wasn’t received well

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