I've never been a fan of Treasury Secretary Tim Geithner - he's a Rubinite who has been too close to Wall Street, and too focused on using government power to protect private shareholders. This is the guy who told the Senate that his primary goal in bailing out the financial industry with public money was not to protect the economy or taxpayers, but instead to use our taxpayer dollars to preserve "a financial system that is run by private shareholders [and] managed by private institutions." Despite my strong disagreements with his ideology, only today have I gotten to the point where I think it's clear he needs to be fired. Why? Because today he proved he's either lying to the public or totally incompetent.
Two stories explain why I say this. Here's the first, showing us how Geithner insists he only found out about AIG's bonuses a week ago:
WASHINGTON (CNN) -- A new timeline released by White House officials late Tuesday evening reveals the president first learned about the $165 million in AIG bonuses last Thursday...The new timeline was released after White House spokesman Robert Gibbs said he was unaware of when President Barack Obama first learned of the bonus controversy and reporters asked that the White House provide a timeline. It also shows that Treasury Secretary Timothy Geithner first found out about the bonuses from his staff last Tuesday.
Now here's the Associated Press, refuting this timeline:
For months, the Obama administration and members of Congress have known that insurance giant AIG was getting ready to pay huge bonuses while living off government bailouts. It wasn't until the money was flowing and news was trickling out to the public that official Washington rose up in anger and vowed to yank the money back...The situation has the White House and Treasury Secretary Timothy Geithner on the defensive. The administration was caught off guard Tuesday trying to explain why Geithner had waited until last Wednesday to call AIG chief executive Edward M. Liddy and demand that the bonus payments be restructured. Publicly, the White House expressed confidence in Geithner _ but still made it clear he was the one responsible for how the matter was handled.
For the willfully ignorant who would like to pretend that AP is cooking up this story, recall that AP's story isn't even really "news" in that it is merely corroborating what we already know and what has already been widely reported: the AIG bonus contracts being cited by the administration were signed in 2008, and as the 80 percent owner of AIG, the federal government (ie. the Treasury Department and the Obama administration) have had access to the company's books and contracts for many months. Indeed, even if you believe that only the Federal Reserve bank was told about the AIG bonus contracts, recall that Geithner was a top official at the Federal Reserve bank when the AIG bailout was crafted and when AIG was telling the Federal Reserve about its finances and obligations - and the Wall Street Journal reported that Geithner was intimately involved in the AIG bailout (meaning he had access to their books/contracts months ago).
That means either Geithner is lying to the public by pretending he never knew about the AIG bonuses when, in fact he did.* Or, he's egregiously uninformed/incompetent and therefore absolutely unfit to hold one of the most important economic offices in our country.
This comes on top of Geithner and Summers dishonestly insisting that they are unable to stop the AIG bonuses because of Sen. Chris Dodd's (D-CT) executive compensation legislation that exempted AIG-style bonuses from limits. In fact, as the Wall Street Journal and Hill newspaper long ago reported, Dodd's original bill would have limited such bonuses, but Geithner and Summers specifically forced him to water down his bill because it was "too aggressive." And yet somehow, Geithner and Summers would have us believe the weakening of that legislation - and thus the AIG bonuses - is Dodd's fault, not theirs.
When looked at in sum, what you see is a Treasury Secretary that is creating a huge economic credibility gap for the Obama administration. He is, in short, undermining Obama's presidency - and it's time for Geithner to go.
* Arguably even worse is the fact that Obama himself knew about the bonuses before the checks were cut, and did absolutely nothing to stop those checks from being cut - but that's fodder for another post altogether.
UPDATE: AP notes that in January 2009, "Reps. Joseph E. Crowley of New York and Paul E. Kanjorski of Pennsylvania wrote to the Federal Reserve and the Treasury Department pressing the administration to scrutinize AIG's bonus plans and take steps against excessive payments." So even if you believe Geithner didn't know about the bonuses from his previous work, he was specifically asked to do the work that would have revealed those planned bonuses as far back as January. He either obliged and did the due diligence that would have revealed the bonus contracts, or he ignored the request. That means, as I said earlier in this post, he's either lying about having just found out, or he's incompetent and didn't fulfill what should be the minimum amount of due diligence when a Treasury Secretary hands over billions to what is effectively a government-owned company.
The bonuses were LEGAL (like them or not), so they COULD NOT have been reversed without running afoul of being ex post facto.... They could have been RENEGOTIATED (like GM, etc. did with the union contracts), but neither GM, etc., nor AIG could have just said "no" to these previously contracted for actions after the contracts were signed.... As Cody Willard would say, "A contract is a contract is a contract"....
Any contract which awards a "bonus" in the case of performance which we absolutely _know_ to have been utter, contemptible _failure_, is obviously a fraudulent contract. The notion that such might be challenging to prove in a court of law passes neither the laugh nor the sniff tests. It's laughable, and it smells like a rat.
So what evidence do you have that Geithner is lying? Isn't it that Geithner's version of the truth doesn't exactly square with yours? But your version, just like Geithner's, is highly selective, and much more emphatic and categorical. You assert that Geithner is not just incompetent but "totally incompetent". Or, he's not just doing a bad job, but is "absolutely unfit" to do it.
I don't think you've established your case that Geithner is either lying or incompetent. Furthermore, I think that this kind of stridency and accusatory tone is a carry over from the Bush Administration, for which it was wholly appropriate, to the Obama Administration, for which it really, at this point isn't.
As Secretary, it seems to me, Geithner's primary responsibility is to assess the status and causes of the overall crisis, not necessarily to be cognizant of all the details of every company involved. Someone at Treasury should have and probably did know about the AIG bonuses, and obviously letting the payments go out was dropping the ball, but I think Geithner is only responsible for the mistake in the same way as President Obama is; the problem didn't get handled in a timely way, and as the boss, both men are technically responsible. That isn't the same as saying they caused the problem, though. However galling, this is a detail in the big picture, not a major catastrophe.
One man cannot deal with every part of this gigantic problem by himself. Reponsibilities have to be divided as well as shared. So did Geithner make a mistake, or did he just fail to catch somebody else's mistake?
In fact, the Federal Reserve should be ABOLISHED so that Congress (per the U S Constitution, Article I) can regain the DIRECT control over the money supply it is supposed to have BY LAW. Its 95+ year run of FUTILITY must be ended NOW, if not sooner.... Ron Paul and those who agree with the abolition of the FED are 100% correct! Read the Constitution before you THINK about saying no to this COMMON SENSE concept....
We live in such a microwave society. Hurry-up, hurry-up and then if things done happen just as we like we are so quick to complain. You will never satisfy 100% of the people 100% of the time.
Obama Administration (including Geithner) is the right ones for these times. Thank God he won.
God help these fickle people!
He has also personally stated that he "loves the market". In this economic climate, multi- allegiance
does/will not work. You cannot serve God AND Mammon. Stop pussyfooting around, Mr. President.
The corporations need to take their medicine and you need to give it to them. If you want to retain your reputation for honesty and believability, that is.
P.S. Don't you just love the Senate committee's suggestion that the bonuses be taxed at 35%? Let's see: $7 million less $2.45 million = $4.55 million. Think the #1 recipient of bonuses would turn that bonus down because of being overtaxed? What a joke!
You may think that the financial system should be replaced with some sort of radical alternative where the bulk of financial assets aren't privately owned, and I would be open to such an option if you could spell out how it would work, but >99% of the public isn't on board with it. Our public officials have a responsibility to fix the system, save jobs, prevent catastrophe, little stuff like that. The utopian fantasies of
Why do you think so much US $$ has gone to other foreign banks, why do we have notes that are not dollars, but a signifier of debt?
This comment wont make it, every time I begin to rant on the fed, you guys rip it down. Have at it.
Again, geithner is a fed plant, we will be at the doorstep of hyper inflation and we will be "rescued" by the amero, the currency of the coming North American Union.
I know, I'm crazy. Please Ignore Me.
Enough. If he's not going to help Obama and if he's going to be fumbling so that Obama is out in front of cameras helping him, then enough. We don't have time for this. It's the sort of fiasco that can cripple an administration. If he's not the man for the job then enough with Geithner.
In any event, Obama has himself in quite a pickle, not just for that which he may know about this deal, but also because if he doesn't act expeditiously, the whole damned thing could blow apart and the Rethuglicans would be the beneficiaries. Now that would be scary.
Shameful.