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Jacob Heilbrunn

Jacob Heilbrunn

Posted: March 13, 2009 08:55 AM

Geithner's Treasury Department Fiasco

What's Your Reaction:

It's four and counting at Timothy Geithner's Treasury department. The Washington Post reports today that H. Rodgin Cohen, chairman of the New York law firm Sullivan & Cromwell, has bailed out on becoming deputy Treasury Secretary. Three others have removed themselves as well, including Annette Nazareth, Lee Sachs, and Caroline Atkinson. According to a British official, the Treasury department resembles an abandoned building -- "There is nobody there."

There are several possibilities here. Could it be that the Treasury department doesn't really need all those top officials? Is it time to start purging federal agencies, just as businesses are shedding their employees?

Or are murky vetting issues the real problem? The rot in America's financial and legal system may be so deep that it's become almost impossible to find candidates suitable for government service. New York Times columnist Tom Friedman is fretting that the ethics rules are too tight, that it's like insisting that a heart surgeon to prove he hasn't eaten a chocolate bar in the past year before he's allowed to operate on a dying patient.

The bottom line may be this: if Geithner can't even hire staff for his own department, how on earth is he going to lower America's unemployment rate?

 
 
 
 
 
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12:25 PM on 03/15/2009
The rot in America's financial and legal system is so deep that it's become impossible to find candidates suitable for government service. Bottom line: anyone with enough of a working background to understand the broadband theft that disemboweled our economy participated in that theft. What's holding Geithner back is not being able to hire members of the club anymore. If he hires honest folks, then the whole house of cards falls down.
02:56 AM on 03/15/2009
It is NOT Geithner's fault that the people he picked in the past to fill the positions, could not successfully complete the vetting process, because they have things in their background that disqualifies them (whether minor or major) At least Geithner, and President Obama have standards, unlike Bush who seemed to be willing to hire anyone, MOST of Bush's staff was made up of lobbyists --- Bush didn't even try to make an effort to avoid hiring them.
06:59 AM on 03/15/2009
Real standards include Tax Cheats in that "it takes one to know one" model
DoTheMath
We're outspent, but they're outnumbered
01:45 AM on 03/15/2009
Could it be that the kind of person who tends to become an expert in high finance is the same kind of person who tends to be really, really interested in making a lot of money? And could it be that for too many years the accepted ways to make a lot of money involved practices that don't sound very good when you're trying to reform high finance? Come on, folks, this is not rocket science. For years, Standard and Poor's, et al, have had a sign hanging in the window, "The ethical need not apply."
12:44 AM on 03/15/2009
There are several factors at play here. One is Obama's lobbying policy. Very well intentioned, and I'd go even further to say it's a great idea. But it's going to take a while for potential public servants to step away from lobbying long enough to satisfy the new stricter criteria. Secondly, Geithner needs people with experience, but not necessarily the same folks who had been asleep at the wheel, that narrows the available pool. Thirdly, and related to the second point, hiring captains from the financial industry is difficult because a) they're either wildly successful and they're not interested in a paycut, or b) they've been at the helm of companies who made terrible decisions, in which case it's difficult to make the argument that they should serve in the Treasury Department. Lastly, the scrutiny on new appointments will be enormous. Geithner squeaked by with his tax problems, so any new appointee cannot have any income tax irregularities. a lot of potential appointees aren't willing to open themselves up to that level of scrutiny.
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11:10 PM on 03/14/2009
What does Treasury have to do with an unemployment rate?

Strange article.
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HUFFPOST PUNDIT
Carolab
Walking an 87-year-old in the sand isn't easy
09:57 PM on 03/14/2009
Did anyone ever stop to think that the Treasury is now simply owned lock, stock and barrel by the FED?
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PhilipTaylor
Legalized Bribery is an Oxymoron - must END
10:22 PM on 03/14/2009
Exactly! Just look at the FED's Maiden Lane LLC set up to buy Bear Sterns and others!

Just look at the clause in TARP that allowed LLC's and the Printing of an INFINITE amount of Dollars while charging Taxpayers Interest on ALL THIS PRINTED MONEY!

The Elite and the Elite Banksters own the FED and the FED controls Geithner and the Treasury.

America continues to be a Victim of the Elite.

NOT "1" Executive has been Fired, Investigated, or Prosecuted!

That tells you who is in CONTROL!
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HUFFPOST SUPER USER
mommadona
I paint. I blog. Therefore, I am.
05:39 AM on 03/15/2009
DUH....

"Prices of the underlying securities5 suddenly plummeted after the initial Fed/Treasury deal, as market spreads shot up, so something more had to be done.

With the revised Fed/Treasury deal came a plan to terminate the “super senior” CDS contracts after all, and purchase the underlying CDOs.

Of the $52.5 billion in off-balance sheet financing referenced above, $30 billion is a loan to Maiden Lane III LLC (ML III), an entity formed by the NY Fed and AIG to purchase (at market value) $64.7 billion face value of the “super senior” CDO tranches on which AIG had written CDS agreements (AIG invested $5 billion in ML III).

In connection with the purchase of the CDOs, the related CDS agreements are being terminated.6

http://johnappel.com/2008/12/12/aig%E2%80%99s-bailout-needs-a-bailout-a-150-billion-problem/
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Carolab
Walking an 87-year-old in the sand isn't easy
09:56 PM on 03/14/2009
Geithner is running the Treasury for the benefit of the Fed and doesn't need interference from anyone who isn't in the same camp. So that leaves him and Bernanke.
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HUFFPOST PUNDIT
PhilipTaylor
Legalized Bribery is an Oxymoron - must END
10:15 PM on 03/14/2009
Exactly! Just look at the FED's Maiden Lane LLC set up to buy Bear Sterns and others!

Just look at the clause in TARP that allowed LLC's and the Printing of an INFINITE amount of Dollars while charging Taxpayers Interest on ALL THIS PRINTED MONEY!

The Elite and the Elite Banksters own the FED and the FED controls Geithner and the Treasury.

America continues to be a Victim of the Elite.

NOT "1" Executive has been Fired, Investigated, or Prosecuted!

That tells you who is in CONTROL!
09:44 PM on 03/14/2009
Part of the problem in staffing Treasury and the Council of Economic Advisors (WH) is the little secret in the Senate -- anonymous holds put on nominees courtesy of the Repubs who have their knickers in a bunch over some slight done to them during the last century. Grow up people. We don't have the luxury of waiting until you take over in 2016.
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PhilipTaylor
Legalized Bribery is an Oxymoron - must END
09:32 PM on 03/14/2009
The corruption on Wall Street infiltrated almost every aspect of the Markets so finding those that remained ethical and honest is hard to find, but worth searching to achieve.

These are the same complaints against "Mark-to-Market!" They want to simply relax the rules and go back to "How We Want to Value Assets", even if it is a "FAKE!"

There is plenty of brilliant talent at Universities across America that have creative yet Honest Ideas that do not worship the Elite and Corrupt FED concept and can add Value to the recovery from this POTFUL of Thieves on Wall Street!
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Carolab
Walking an 87-year-old in the sand isn't easy
10:09 PM on 03/14/2009
The Federal Reserve and U.S. Treasury eliminated executive-compensation limits for companies that bundle loans accepted under a new $1 trillion program, indicating the rules may have hampered efforts to start the plan.

The rules won’t apply to the Term Asset-Backed Securities Loan Facility out of “desire to encourage market participants to stimulate credit formation and utilize the facility,” the New York Fed said in a document on its Web site today. The government separately said it will expand the TALF to support vehicle-fleet leases and loans for business, construction and farm equipment.

The Treasury and Fed also today reiterated that they will seek legislation to give the Fed “additional tools” to manage its balance sheet. The effort stems from concern that taking on longer-term assets will make it more difficult for the central bank to raise interest rates once the economy recovers.

Possible legislation may allow the Fed to issue its own debt or let the Treasury issue bills for Fed use that are exempt from the federal debt ceiling, JPMorgan Chase & Co. economist Michael Feroli said.

http://www.economicpopulist.org/?q=content/fed-seeks-additional-tools
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PhilipTaylor
Legalized Bribery is an Oxymoron - must END
10:53 PM on 03/14/2009
Well at least NOW we know that Congress and our government are run by the "Untouchable Executives on Wall Street!"
08:50 PM on 03/14/2009
"If Geithner can't even hire staff for his own department, how on earth is he going to lower America's unemployment rate?"

You really are clueless, Mr. Heilbrunn. The Treasury Secretary is in no way responsible for fixing the unemployment rate.

That would be the Secretaries of Commerce and Labor in conjunction with the President and Congress.
07:38 PM on 03/14/2009
Check this out...have Stewart and his Comedy Central Investigative Team have the tax delinquent eviscerated on the Daily Show...all new viewers would be tuning in to see the spectacle could lead to Stewart's highest numbers ever...the message WILL be sent...get on the stick Geithner or ...
06:41 PM on 03/14/2009
Does Geitner not know that he should not go to the SEC to recruit? The SEC is the problem and anyone he hires from there probably knows too much, and should have been blowing the whistle for years instead of watching the house of cards come crashing down.

I distinctly remember the SEC chairman turning down money Congress offered him for more oversight personnel. I distinctly remember McCain saying that the SEC chairman should be fired and wondering why the SEC chair. Now we know. But that tells me that McCain knew exactly where the problems were, and he also kept his mouth shut.
06:17 PM on 03/14/2009
Obviously, at least one department does its job way efficiently - the vetoing team. They should put these people in charge of reviewing the necessity of specific governmental jobs in general - given the difficulty of finding competent personnel.
04:49 PM on 03/14/2009
I used o practice banking law in NYC with a money center bank.

Anytime a banking law expert had a question, Rodg Cohen was the go to guy.

I don't know anything about his politics, but it's a shame that such an accomplished guy isn't in the running.
03:47 PM on 03/14/2009
The problem is in turning to the incestuous community of Wall Street investors for the position of treasury secretary. They in turn select their aides, buddies and former cohorts who have all evaded the same taxes, collaborated on the same derivitaves, earned the same obscene bonuses, flew in the same corporate jets, and lobbied for the same deregulation policy. No wonder they can't find anybody. None of these people want to expose themselves to the scrutiny it would take to pass muster.

If there was ever a time when we need a true outsider, beholden to no one, to come in and take on the Herculean task of cleaning out the Augean Stables that is our financial markets, it is today. You won't find that kind of person on Wall Street.
07:47 PM on 03/14/2009
There are good people available but it is up to O to ferret them out and hire them.

I think a lot of people are freaked out that our aces aren't in Washington cleaning up the mess.