Geithner: Bailouts 'Deeply Unfair,' Financial System Was Run In A 'Crazy Way' (VIDEO)

WASHINGTON (AP) - Treasury Secretary Timothy Geithner said Thursday it's "deeply unfair" that some financial institutions that got taxpayer-paid bailouts are emerging in better shape from the recession than millions of ordinary Americans.

He acknowledged public outrage over that and said people watched with disdain as Washington protected high-risk banks and investment houses, even as the national unemployment rate was soaring to double-digit levels for the first time in a generation.

But in a nationally broadcast interview, Geithner also argued that President Barack Obama had no choice when confronted with a financial crisis.

"As the president has said, we had to do some very unpopular things," Geithner said. "People looked at what had happened."

WATCH the interview:

Visit msnbc.com for breaking news, world news, and news about the economy

"It's not fair. It's deeply unfair," he said. "He (Obama) had to decide whether he was going to act to fix it or stand back ... and that would have been calamitous for the American economy."

The government eventually embarked on a program of assisting the threatened financial institutions, and the sweeping, multibillion-dollar Troubled Asset Relief Program (TARP) created as a bailout engine.

Geithner also said that administration officials are "very worried" about recovering the more than 8 million jobs lost in the recession. But he noted that business growth has been improving and expects the economy "is going to start creating jobs again."

The secretary agreed that the national jobless rate -- now at 9.7 percent -- is "still terribly high and is going to stay unacceptably high for a very long time" because of the damage caused by the recession.

"Just because this was the worst economic crisis since the Great Depression," Geithner said, "a huge amount of damage was done to businesses and families across the country ... and it's going to take us a long time to heal that damage. "

More than 11 million people now are drawing unemployment insurance benefits, and the overall jobless rate of 9.7 percent understates the true level of economic misery because many people who give up looking for work are no longer in the official count of the unemployed.

The Bureau of Labor Statistics on Friday will release a report on conditions in the labor markets in March.

Geithner said he hopes skeptical voters will note legislation moving through Congress to bring reforms to the financial system.

"What happened in our country should never happen again," he said. "People were paid for taking enormous risks. It was a crazy way to run a financial system." Geithner said, "It's the government's job ... to do a better job of restraining that kind of risk-taking."

The Geithner interview was broadcast Thursday on NBC's "Today" show.

(This version CORRECTS Corrects time element in last graf. Moving on general news and financial services.)

Comments

[GloriaY]

05:45 PM on 05/09/2010

TARP money cannot be used by the Wall Street bunch to lend to the smaller banks which in turn would create hundreds if not thousands of jobs, but it can be used to give obscene bonuses to a bunch of greedy crooks and robber barons. The United States is in a downward spiral, thanks to the likes of Geithner, Greenspan, Summers, Bernanke, Paulson, and the other "EXPERTS." Meanwhile, their mega salaries are intact, and millions are on the unemployment lines for one and two years, and foreclosures continue to spiral out of control. It is astonishing that not one of these crooks is in jail.

[YMBM]

03:52 PM on 04/03/2010

I watch Treasury Secretary Timothy Geithner C-Span meeting and I was left in a perplexed state of Mind! How can the Federal Reserve have it hand in the Treasury to go and get our tax dollars anytime? The Federal Reserve control the market with the Discount Rate and tighten and easing of the Monetary Supply. They promoted bonds in backed my the US and when foreign country bought these bonds that were junk the US Fed Reserve Paid them back and left the little American banks that bought the same bonds out to dry!! Can Some Explain To Me How These Two Operating Entities Should Work? Because it appears like they were not adequately doing there jobs in the great expand of 00 which ultimately related to a great bust. I am totally confused!!!

Confused, can someone help me understand the true connection between the two entities? Oh, and I heard that we want to place the Financial Oversight in the hands of the Federal Reserve? Wow that will be a huge mistake, the Federal Reserve has a lot on its plate, such oversight should be with and entity that is not controlling the markets and should be independent of the Federal Reserve.

[sandzw007]

11:29 AM on 04/03/2010

Dear Mr. Geitner,
You are so right and you are one of the crazy guys that contributed to this problem.
You should be in jail not in the White House.
Stay out of the news. It just makes you look as bad as you are.

[MichaelLittleBig]

09:51 AM on 04/03/2010

Pattycake Pattycake Bankers Money,

Gives a lot to its Congressional Honey,

Pattycake Pattycake Bankers Greed,

Congress demands more money for their need

Micahel LittlleBig-Poet
Cleveland Ohio

[MichaelLittleBig]

09:32 AM on 04/03/2010

Well Geithner if you call the bailouts unfair,

What do you call the Congress 's chartering and licensing of banks and lenders that stole 10 million homes through foreclosure?

Michael LittleBig
Cleveland Ohio

[catbite]

09:31 PM on 04/02/2010

Well, Timbo, let's fix the problem.

[marijam]

08:24 PM on 04/02/2010

What happened? Did somebody give him a copy of The Big Short? Or maybe 13 Bankers? How come he suddenly "got a clue"?

[sonofsamphm1c]

10:52 PM on 04/02/2010

There has never been a point at which he has not had a clue. It is becoming more and more apparent that Geithner saw both the problems and the most efficient solutions. On the other hand, there have been extended periods of time when Krugman has not had a clue, when Reich has not had a clue, when Stiglitz has not had a clue, when Warren had not a clue, etc..

The bailout worked and will continue to work. It's cost is going to be significantly less than first thought.

You would have to be in deep denial to not see this.

[LizM]

11:23 PM on 04/02/2010

If you had been following what Secretary Geithner has been doing for the last couple of years instead of relying heavily on what you hear throughout the media/blogosphere/punditocracy, then you would know that your questions are off base.

Ironically, it may be the public that is FINALLY getting a clue as to what Geithner has done and is doing to stabilize the financial system and make it more equitable and sustainable over the long term and prevent another crisis like this from ever happening again. And, I'd like to know what took them so long!

[stfuman]

09:46 AM on 04/03/2010

YAWN.

A simple glance at your recent American history would show that these people (Geithner, Summers, Levitt, Greenspan and Ruben) are the same ones who set up the system to be gamed in the first place.

Oh yea, let's trust them and put faith into those who created the crisis, to fix it.

[Skyblue22]

12:41 AM on 04/02/2010

Facts. 1. There are few industries that can soak up the current unemployed and offer good wages. Since the Regan administration encouraged outsourcing, the trend for American workers and the middle class has been down. The government has leveraged assets to create bubbles and minimize the sense of loss. 2. The FED is in a speculative death spiral. Cheap money facilitates gambling and the inefficient allocation of capital. 3. The interest on our debt will create an unsustainable scenario. In summary, no strategic and competive industries to employ. A gambling culture, And a lot of debt to service. Thank you Tim, Hank, Larry, Ben and Alan. Superb job! Well done.

[HenryDavid]

11:55 PM on 04/01/2010

It appears Tim is being put out there by party officials, and/or his boss at the WH, to say whatever it takes to get support for the Pres. and the dem. candidates who have to run soon.
"Tim, your job is to go on TV and tell the public about the bad people who ruined the economy and how the President supported the bailouts only to save the country from doomsday. And, yes, tell the people the jobs are coming back. No, don't say anything about your connection to the WS crowd. If there is a reference to people's anger about the WS bonuses, give some vague, indirect answer about how the whole situation will be handled differently next time. And don't mention that the stimulus funds were used by both political parties to dole out to campaign supporters instead of tradesmen who could have really done the home weatherization and other things we said the money would be used for. We know your credibility is low, but say something--there's an election coming up!"

Bottom line--the jobs are not coming back. And yes, we were truly blackmailed by WS and their enablers--Congress--to get the bailouts and virtually 0% interest on government mega-loans. Never forget that--we were blackmailed, and it will happen again before the final crash and chaos. At that time, Tim will probably own an island in the Caribbean and be sipping some exotic drink when the U.S. burns.

[Harrier]

06:16 AM on 04/02/2010

By now, everyone knows it was Geithner, Summers, Levitt, Greenspan and Ruben who were doing everything possible to prevent gathering and collecting information on the black unregulated economy of credit default swaps, derivates, and sub-prime lending; but also doing everything possible to deregulate further while coordinating with each other to destroy those who were trying to save the economy from the black economy they were creating. The statements Geithner made in this video has never been his words. Geithner, has and always will be a wall Street corporate financial welfare man. The words he used were those from Brooksley Born whom he teamed with the others to have shut down for trying to put true safeguards into place and gather information to prevent such a catastrophe that he fervently opposed. Geithner, Summers, Levitt, Greenspan and Ruben were doing everything possible to allow wall street to do exactly what they were doing and allow laws deliberately made to prevent depression era practices and safeguard the economy to be lifted.

Geithner speaks about reform and protecting consumer and the taxpayer, but has still refused to even begin instituting any safeguards from this happening again. This was needed when he lended the money out. If you are young and not aware, here is a brief overview.

http://www.pbs.org/wgbh/pages/frontline/warning/?utm_campaign=homepage&utm_medium=proglist&utm_source=proglist

[ncmom54]

11:35 PM on 04/01/2010

"Banks are Unintended Beneficiaries of the Bail out" Larry Summers
http://www.huffingtonpost.com/2009/10/22/summers-banks-are-uninten_n_330741.html

and they also own most of Main Street now... http://www.rollingstone.com/politics/story/32906678/looting_main_street/print

those businesses were jobs, community supporters, tax payers that aren't coming back because they're GONE, SHUT DOWN.

instead of bailing out the predators that wrecked the economy, leaving Communities, Main Street and a tsunami of unemployed workers (through no fault of their own)
What if... that same money had been used to establish State Banks? http://publicbanking.wordpress.com/

I know, hindsight is 20/20 but it also seems like somebody(s) knew exactly how this would play out.
and it's working out quite well for them.

[berrycooda]

10:58 PM on 04/01/2010

Want some cheese with that whine....
Wasn't whining when the money was being given out by the billions.
Now is whining because they are coming out on top.
Seems like double talk to me.

I still say for the umpteenth time....
MAKE ANYTHING FOR OUR MILITARY MANDATORY THAT IT BE
MADE IN AMERICA.
We need something to be proud of again. Did it after Pearl Harbor and
we can do it again. The Gov't awards contracts and even if it costs a little more in America, the people will be working and paying taxes
into the government.
Still stimulus money around....use it to open up factories and turn them over to the people.
They are capable of making anything from shoes, boots, socks etc
all the way up to the vehicles that the Military uses.
After all....isn't it enough that we send out troops all over to baby sit
the world.....do we need to send our work too. What are the vets
supposed to do when they come home....go on welfare? like a lot
of dead beats who never worked a day in their life. Only thing they have to do is go pick up the food stamps and welfare check.
Start some work in this country with the government contracts.
The government wants to do everything else....SO START THERE.

[SilentSolidarity]

09:50 PM on 04/01/2010

"Geithner also argued that President Barack Obama had no choice when confronted with a financial crisis." NO CHOICE?

These are THREE choices how our financial system could have evolved after the nationalization (also called bail-out):

1. These banks would have been slashed the week they have been nationalized. The government would set new rates to make loans, credits, fees fair and affordable without forcing the banks into bankruptcy. Several decentralized banks are less likely to turn into too-big-to-fail banks.
http://en.wikipedia.org/wiki/Cooperative_banking

2. These banks would have been nationalized and united to one government-owned (not run) bank that makes loans, and credits available at a rate that keeps the new public bank self-sufficient. People would be happy, the government wouldn't have to worry about too-big-to-fail because it is always informed.
http://en.wikipedia.org/wiki/German_public_banks

3. These banks would be kept in their current size. But the government would have the power over how much those banks can charge for fees, rates, credits, loans, etc. They would also need approval from the government for large or risky investments.

Everything would be possible if our government wouldn't be so coward when it comes to doing the right thing for the average American.

[themodernleader]

08:42 PM on 04/01/2010

In this declining democracy a despised administrator such as Tim Geithner can look the population straight through the boob tube and commisserate with our penury and idleness and looming bankruptcy and say with much showmanship: "There is nothing more we can do. Joblessness will be here to stay for many moons".
My heart almost breaks listening to those caring words. But slow down. Hold on. This dispicable administrator conspired and covered up the fraud and transfer of wealth. He made more wealthy and powerful a criminal cabal of financiers. He was part of the group that diminished the American currency. Of course not. He can not envision any way to put 30 million Americans to work. He is not a friend of the American membership.
Obama will forever regret hiring this Bush Bunch. He will never be forgiven for following the same Bush banking policy. He will leave a more stricken, forlorn and broken membership than the stricken membership he inherited. And his economic team will be his undoing for supporting other than our Constitution and democracy.

[Ranta]

05:13 PM on 04/02/2010

When Bernie Saunders asked Ben Bernanke where the bailout money went Bernanke said something to the effect of I'm not going to tell you.
The Fed should not be able to spend taxpayer money without being accountable to congress. If anything is unconstitutional, that is.

[stfuman]

09:48 AM on 04/03/2010

Sanders also asked him, if he thought the repeal of Glass-Stiegal was a mistake... to which Bernake replied "No..."

[Jannsmoor]

06:35 PM on 04/01/2010

The Volcker Rule places limits on bank size and prohibits commercial banks from trading for their own accounts — known as proprietary trading.

Washington Post 1-22-2010 "But through much of the past year, Geithner said the best approach to limiting it is to require banks to hold more capital in reserve to cover losses, reducing their potential profits. Geithner said blanket prohibitions on specific activities would be less effective, in part because such bans would eliminate some legitimate activity unnecessarily."

Bloomberg 2-24-10 "The U.S. Treasury Department wants to give regulators discretion to define proprietary trading."

sonofsamphm1c - I am really trying hard to find evidence that Geithner really is 100% in favor of the Volcker Rule (as you maintain), but frankly, that would require I ignore how he has behaved, which, based on his history of deregulation, I am simply unwilling to do.

[ReedYoung]

05:56 PM on 04/01/2010

Even after his very convincing interview with Rachel Maddow, in which he really seemed to care about regulating profiteers and preventing business from committing fraud under color of law, he is still aggravating.

"People looked at what had happened."

It did not just happen. Quit with the passive verbs. Phil Gramm and his cronies did this and you cannot solve a problem whose cause you do not understand and acknowledge.