Here's a walk down memory lane that's worth taking, even if it makes your blood pressure spike a little: Three years ago Tim Geithner was in the position of having to explain why the Federal government wasn't going to nationalize the nation's failing banks. In 2009 many people expected that to be part of the government's bank rescue plan.
Only three years. It seems so long ago, doesn't it?
In 2009 there was a very compelling argument for a Federal takeover over these failing institutions, which had been so negligently (and very possibly criminally) mismanaged could no longer survive on their own. And while nationalization wasn't the only course worth considering, this snapshot from our national past reflects the gravity of the crisis caused by bankers.
It's also a useful reminder of the extent to which bank CEOs failed to pass even the most basic test of executive competence - namely, not destroying your own corporation.
Three years ago bank CEOs expected that the Administration would take firm measures against them as it rescued and restructured their institutions. That would have been the logical thing to do. After all, an entire set of corporations has failed spectacularly, shattering the global economy and forcing taxpayers to provide them with hundreds of billions of dollars in rescue money.
But no, Geithner told reporters, there were no plans to nationalize these failed, collapsing institutions. Instead Geithner said he was beginning a process he described as ""efforts taken to date to improve transparency and accountability." What else was in the news in early-to-mid 2009?
Three years ago journalists were reviewing Geithner's work history as head of the New York Federal Reserve, and noting some rather dramitic shortcomings in his performance there, like his failure to spot impending doom at Citigroup . That's like being the astronomer on asteroid watch who misses the fact that our planet is about to be struck ... by Jupiter.
Widespread concerns about Geithner's coziness with Wall Street were even being reflected in the comments of nonpolitical observers like Christopher Whalen of Institutional Risk Analytics, who was troubled by his relationship with Goldman Sachs.
Economics and law professor William K. Black was even more blunt in his assessment of Geithner's plans three years ago, saying that Geithner was continuing predecessor Hank Paulson's "policy of violating the law." As Black wrote in February 2009:
"The law mandates that the administration place troubled banks, well before they become insolvent, in receivership, appoint competent managers, and restrain senior executive compensation (i.e., no bonuses and no raises may be paid to them). The law does not provide that the taxpayers are to bail out troubled banks."
But Geithner insisted things would be different. Here's what Geithner told Jim Lehrer in June 2009:
"You will see conditions to make sure that the support generates more lending than what would have been possible, that the support does not go to pay dividends or excess compensation, to make sure that the conditions come with the kind of changes in the structure of the entity necessary to make them stronger going forward, and they provide accountability.
"You will see conditions to make sure that the support generates more lending than what would have been possible, that the support does not go to pay dividends or excess compensation, to make sure that the conditions come with the kind of changes in the structure of the entity necessary to make them stronger going forward, and they provide accountability."Since then we've seen three years of soaring bank profitability, as too-big-to-fail banks used bailouts and Federal Reserve largesse to recapture a disproportionate share of the nation's profits, while becoming even more dangerously oversized than ever. We've seen three years of runaway bonuses, thanks to the US taxpayer. We've seen three years without the institutional restructuring that Geithner promised.
And we've seen a three-year lending drought, especially for the individuals and small businesses that are so critical to economic growth.
Here's another exchange with Lehrer, in which Geithner explains that of course the government will not give money to bankers without expecting something in return:
GEITHNER: The government gets an ownership stake in the company proportionate to the level of assistance we're providing.Needless to say, it never happened, and instead we've been given implausible tales that suggest the taxpayer "made money" on the TARP bailout.
JIM LEHRER: Just like anybody else would if they bought stock, right?
TIMOTHY GEITHNER: Just like anybody else would if they get stock.
Sure, Geithner was talking tough in those days, telling Lehrer:
"I am deeply offended by the quality of judgments we've seen in the leadership of our nation's financial institutions. They've caused a very damaging loss of confidence. Financial systems require confidence; they're built on confidence. They've created a deep hole of public distrust and anger, which is enormously damaging."That's true of those bank executives, of course. But so's this: With one or two exceptions, they all still have their jobs.
In 2009 Geithner told Lehrer that bank executives "have a huge obligation to try to restore ... basic trust and confidence," adding that "we're going to make sure they do it by making sure that our assistance comes with conditions that will help restore confidence in the American people... "
"We're going to do things that are going to help get credit flowing again," Geithner said, adding: "Nothing we do for banks is for banks. It's all for the benefit of the people that depend on banks -- the businesses, the families, the students -- that require credit in order to do things that are important to their future."
But three years ago it was also being reported that Geithner prevailed over other White House officials, making sure that banks would have no limits on the bonuses they could pay out with taxpayer rescue money, no restrictions or requirements on how they spent the taxpayers' rescue money, and no requirement that failed bank CEOs would be forced to pay for destroying their own institutions and shattering the world economy - not even by losing their jobs.
Three years ago Geithner was appointing a Goldman Sachs lobbyist as his Chief of Staff, even as he told Katie Couric that "of course" he was willing to force bank CEOs to resign.
Geithner was talking tough:
JIM LEHRER: (A)re the bankers and the banking industry, have they gotten your message now? Do they realize there's a new world here for them?Why dredge up the aggraving stories and frustrating quotes of yesteryear? Because the past is prologue. As we'll see in Part 2, Geithner continues to protect too-big-to-fail bankers. "Immunity" is defined as "the state of being protected from something" - and bankers are even been protect from their own incomptence.TIMOTHY GEITHNER: They will, Jim.
And that's not even the worst of it. This is: On the criminal front, Geithner continues to insist that bankers did nothing illegal in the run-up to the crisis - despite a mountain of evidence to the contrary, and despite that fact that he pushed a deal that brought a number of criminal investigations to a premature end.
(Coming up - "Geithner's World, Part 2: Guilt and Innocence")
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You wouldn't expect an officer while out giving traffic tickets to suddenly stop and say:
"Hey, maybe I should arrest these bankers and crony capitalists!"
And I wouldn't expect for them to mobilize on the request of the average peon "concerned citizen"
I voted for Obama but can never vote for him again. NDAA, his flaccid DOJ, SEC, Federal Reserve, OCC, the Treasury - he hands them all over to criminal enterprises, refuses to see his own blame in the matters and harasses whistleblowers that might expose the dark side of 2 faced policies. He is certainly all about illusion and little substance. It's unthinkable that the goals of this and the previous administration think it's ok to lay the debt on successive generations of Americans - our children. It's outrageous.
Get off your hate wagon and wise up.
The financial industry became the backbone of the American economy. Unless we replace the backbone with more traditional industries we will be stuck in the boom and bust cycle of the last 30 years.
Just a side note: go back and look at the words of Alan Greenspan, one of the original architects of this new financial industry. Every word that he uttered about markets being able to self-regulate and the safety of complex financial instruments that "spread risk widely" ended up being completely wrong. I think it's more than time to stop listening to the economists that were happy to tout the benefits of OCD's, derivatives and deregulation and start listening to the economists that were sounding the alarm before the whole house of cards came crashing down.
--------- continuing predecessor Hank Paulson's "policy of violating the law.-----------
Paulson was not prosecuted.........
I agree with your premise, but lets at least get the numbers right.
The popular belief, especially after McCain’s defeat, was that the country had made a break with its morally transgressive and reactionary past and that Obama signified not just hope but political redemption. Such views ignored both the systemic and powerfully organized financial and economic forces at work in American society while vastly overestimating the power of any one individual or isolated group to challenge and transform them.
YEP
YEP
This all did not start on 1-20-2009!!!
I copied and pasted what should be obvious to anyone - but after seeing how so many low information voters there are in the US --
Should have started with him then others would think again.
In 1970, we went off the gold standard. It had kept the economy stable. It held down free floating price increases, kept costs small, oil in check and bank reserves non-depreciably tangible.
But it limited opportunity, profit-margins, overseas expansion, currency speculation and interest income. And we just weren't satisfied with our security against the communist menace. By floating the dollar, U.S. capitalism could leverage the world under its thumb.
OPEC attacked us then, they embargoed the oil. The first great recession ensued--prices and interest rates soared, wages stagnated, jobs fell-off and the poli-economic elite deregulated. They kicked-off a thirty year process of securing their wealth while depleting ours.
Then 9/11 happened--those were the world trade center towers, our financial blood stream. Frightened again, the now well entrenched plutocratic elite set-in on saving themselves. They sucked the loose change out of the system, ran get-rich-quick schemes, bubbled our economy and stole the principle right out from under our feet.
And it needs be kept up, the elite believe they've a right to handle the money amongst themselves. They finance each other into office and reward one another with riches. With their left hand in the till, their right hand signals to us that it'll all be just fine.
Capitalism--me first, screw you--cannot work without extensive regulation against the shady-side of human character. All aspects of civilization are like this. Otherwise, criminality takes-over.
The nation--its federal government--is always a country's #1 employer. This is because so many necessities do not generate return on investment. The government invests in companies--which grows business--by contracting them on all sorts of infrastructure, research and national projects (as did FDR with Hoover Dam, and WWI), such as nation-wide green energy implementation.
Nationally, the only real income is foreign income. All domestic income is simply recirculation. Thus the amount of money a government can spend annually equals it's net foreign income. The lions share of that needs come from foreign income and domestic taxes make-up the rest (67%-33%)...it's steep, but rapid foreign expansion is imperialism and it creates terrorism.
Currency needs be based on non-depreciable natural resources--all of them, plus a nation's labor force, educated and unskilled. It's like a super-gold standard that remains stable simply due to population. Profit margins need be moderate, interest rates no more than 5%, and production principally done at home to supply nation with surplus to export.
Really, it's that simple. But it benefits nobody but you and I. And no one gives a flick about us.
It would be, of course, impossible to go back to the gold standard. But the free-floating currency is a total failure. I'd tell you the answer, but that should be obvious to anyone with sufficient knowledge of economics.
...which just shows us how few people actually have sufficient knowledge...
Especially when going to the TARP distribution web sites and see where Bush wanted these TARP funds to go.
Obama should have pitched a fit.
But hey, suprising the American people 6 weeks before the election was brilliant.
Obama didn't mean that EVERY activity on Wall St. was technically legal.
I am sure he wants SOME of the crooks to be nailed.
You are interpreting some remark he made as a belief in blanket immunity or exemption from prosecution, which it is doubtful he meant at all.
It is obvious that Goldman Sachs and the ratings agencies and other entities were misrepresenting what they sold to clients while being aware of the toxicity of those "assets".
No elected official would make such a pronouncement as you describe.
Much activity clearly was criminal in my opinion and some of it - far too little - will be proven to be so in court in the course of time.
Not only is his performance on the line.
But so too is the Senate Finance Committee whose vote and recommendation to the full Senate propelled him into that high office.
Senator Chuch Schumer's recommendation and Paul Vocker's recommendation are also on the line.
I think the place to start the evaluation is the Senate's Confirmation hearing.
Max Baucus and Charles Grassley, as Chairman and ranking member, led the hearings of the Finance Committee.
http://www.c-spanvideo.org/program/283506-1
Just a preliminary evaluation just from Baucus' opening statement is instructive.
Baucus essentially outline the job performance:
1. To control executive compensation being paid with taxpayer money....Fail
2. To help struggling homeowners with their underwater mortgages...Fail
3. To help small businesses get credit...Fail
4. To re-regulate the concept of too big to fail....Fail
Just on these terms, Geithner is a failure, not even going on to evaluate his performance on stopping and prosecuting mortgage fraud, stopping and prosecuting off shore bank schemes and stopping and prosecuting tax fraud schemes.
Obama's choice for Treasury Secretary has been A BIG FAT FAILURE.
Geithner started before Obama? Right?
NO.
Geithner was President of the Federal Reserve Bank of NY.
Obama nominated him to be Treasury Secretary. Right?