Geithner: Where Was the Beef?
In today's press conference, new Treasury Secretary Geithner talked tough. He even talked right. Indeed, he talked beef. America needs a full-blown bank rescue. It must devote a lot of money to stem losses in the housing market and limit new defaults. Geithner talked in the needed trillions of dollars.
But then the meat did not show up. Fine principles aside, what's the actual plan in real life? Geithner was short on the details and that was disturbing. Is there still infighting among advisers on how to proceed? The New York Times reported yesterday that Geithner won the internal debates. Sounded like a clever press plant to me.
Just a couple of issues:
One, Geithner says he will involve private capital in helping determine the price of toxic assets: the classic public-private partnership. An earlier idea about simply buying up toxic assets was criticized because the government does not know how to price them and may pay too much. Geithner says involving private capital will help determine a better price. But he plans to create incentives and guarantees to attract the private capital. How do you do that without making an implicit estimate of the value of those assets? It's simply a horse of a different color, I think. Pricing is still the issue. I await the details.
Two, I waited breathlessly for details about how to rescue housing. It is the toughest of problems and Geithner made clear it was the "most" critical. It is very had to get a handle on the issues because to bail out the bad mortgages means also bailing out lots of goods one at a high cost to government. So what's the plan? It will be rolled out over the next few weeks. Not few days but few weeks. In other words, it's not ready. More infighting? Bickering with Congressional leaders?
This administration is far more on top of the issues than the last one. They are working hard at doing the right things. They are talking serious money, which is required. But the details so far are skimpy and the value of the public-private partnership at this point hard to understand, except as an ideological political ploy.
The principles are encouraging. But the tale is in the details.
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THE DETAILS ARE THAT HE LEFT THE BALL IN THE BANKS COURT !!!!!
THEY CREATED THIS MESS THEY HAVE TO FIX IT.
THE U.S. TREASURY IS A LENDER OF LAST RESORT.
THEN THEY MUST QUAILFY TO GET ANYTHING !!!!!!
...thus the negative response in the market yesterday. The investors were expecting more candy and were disappointed. Frankly, I am all for no help, let the free market correct itself, and let the chips fall where they may. I think people should be going to jail, losing their jobs, losing their personal assets in civil court and many other things that are not happening. I bought into this political process thing by casting a vote...with the knowledge that they (politicians) would never be as radical in approach as I would be. If the economic system were a building, I would condemn it, tear it down, and rebuild it, brick by brick, that way I could trust the entire structure because I know it. The way things stand now we have undiscovered ponzi schemes going on in some segments of the structure, obscene theft through compensation in other rooms, corruption grift and graft in the basement, and general rodent infestation throughout, all while the superintendent sleeps (oversight/regulation).
I would also like to see what position certain self-promoting financial geniuses took two to five years ago on the practices that are now deemed to be...the problem, those people who sit on TV and criticize as if they know the answer, as if they have a vision. I said below that Geithner is not giving me the warm and fuzzies. I am willing to give him a chance where some people want to throw him out the window now.
While I do not disagree with your point about the absence of details, I disagree with your rush to judgment. The solutions to this crisis will require careful consideration and considerable planning to succeed. We live in a society that has come to expect simple, instant answers to complexities...hence the success of ridiculous things like right-wing radio. I would rather that Secretary Geithner take a little time and get it than rush a less than comprehensive plan designed to feed the 24 hour "news" cycle of the profit-hungry mainstream media.
As President Obama demonstrated in his campaign, and as former President Bush demonstrated in his failed presidency, this is chess, not checkers.
Instant gratification and overly-reactionary solutions rarely provides the best result. Chill out.
You can't give details about solutions that don't exist. This is ongoing, and will be for years. The only promise one could make right now would be to commit vast taxpayer funds to rescue the people who got us into this mess. I like this better. We don't know what assets banks have, we don't know their value, we don't know what the banks will give up in exchange - what Geither did was refuse to commit to a blank check for the banks, and as a result the market tanked. What I heard is the fed will commit to helping, but it will look for private funds first, and it won't commit anything until the institutions submit to a complete review of their books - and the packages won't be the same for everybody. I simply don't have a problem with this. Give it time.
Why should they give the media all the details right now, that isn't necessary. The problem we have is 24 hour news coverage and the press wanting things instantly. Be patient.
On a spiritual level Geithner is not registering well. I am quieting that aspect of my being and allowing the plan to play out. I hope I am wrong. In the spirit of being towards solutions I will add that the housing issue is the issue (foreclosures and declining value of assets). Whatever plan emerges should be a plan that allows the most people to stay in their homes, and that allows the value of homes to stabilize. The “how” of such a plan is the giant hurdle. How do you equitably allow for retaining ownership of properties that are months behind in payments? How do you fairly price a market that is still contracting due to foreclosure and scavenger sales where assets are picked up for pennies? Wealth is being generated now. Some people are making lots of money and expanding their real estate portfolio. Those people should not be penalized for fair business practices.
I see a nexus of private money, and federal and local government creating a neighborhood revitalization program that fosters value stability, improves living conditions for renters, provides incentives for “community-dwelling buyers”, and assistance for distressed homeowners who have the means to pay a fixed low rate loan (restructuring). The states are asking for money, and a revitalization/housing resuscitation program that transforms American towns, cities, suburbs, rural and urban areas, is an infrastructure spending proposition, a jobs retention or creation initiative. It does triple duty, in preparing the American landscape for the future.
You can't determine how much the banks need until you see their books. They've being vague, so he's being vague. Although I am glad to see that congress has decided to stop sleepwalking all of sudden. They laughed at Geithner's response, when their oversight has been a joke for decades.
There is no beef.
I believe that Obama needs a watchdog/whistleblower example to work with Geitner and the others. I watched the SEC hearings and saw a guy named Markopolis take a torch to the incompetent SEC about Madoff...they will making a movie about this guy here soon. He's a cross between Rainman and Monk...I don't know his politics nor do I care. He made incredible sense and has economic credentials up the wazoo. He was asked if the SEC, in its present form could find bad actors of any kind to which he replied "If you were to bus the SEC to Fenway park for an afternoon I highly doubt they could find first base." This is the guy they need to talk to. He dogged Madoff, with NO money of his at stake for 8 years...handed the SEC the Madoff case to them on a silver platter and they ignored him. Obama needs to thank Markopolis publicly and inquire into what he is doing with his time. Now THAT would be golden...
Agreed. We need reformers in the administration. All we have gotten so far are Clintonistas and rejects from Kissinger & Associates i.e., Geithner.
Will the auditing of banks cause them to be declared insolvent? Then what? I wonder what the markets will do to banks in the next couple of days. I don't have a very warm and fuzzy feeling about Geithner's leadership.
You don't even know Geithner yet, give him a chance.
I hope it's only a question of timing (pass the bill first) : I don't like the idea of Geithner winning on all points there. This guy is not my idea of a visionary and there are better people around Obama to push for more responsibility.
I expected the Obama plan to pave the way for more relevant international regulations / watchdog reforms.
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