Will Geithner Fire Corporate America?

Tim Geithner said on Sunday's Face the Nation that the Treasury might fire the heads of big banks that depend on financing from the federal government, just as it summarily deposed Rick Wagoner, the former CEO of General Motors -- and before Wagoner, the heads of AIG, Fannie Mae, and Freddie Mac. "Where that requires a change in management and the board, then we will do that," said Geithner.

I suppose it's comforting to know our government stands ready to fire corporate executives and directors whenever taxpayer money is on the line. But I suspect Geithner's new tough line is mostly designed to reassure a public that's lost all faith in the wisdom of bailing out Wall Street.

For the sake of the argument, assume he's sincere. What criterion will an axe-wielding Geithner be using? If precipitous loss of shareholder value is enough to "require a change in management and the board," presumably every CEO and director of every big bank now being bailed out should be fired, starting with Ken Lewis of Bank of America.

If the criterion is diversion of taxpayer money to uses other than Congress intended when it first authorized the $700 billion bailout, the list of soon-to-be-fired CEOs is a bit shorter but still large. Surely it includes all the bailed-out banks that continue to fly their executives around the world in company jets, award them extraordinary pay packages, and run junkets at fancy resorts. Citigroup's Vikram Pandit (who collected $38.2 million for his taxpayer-subsidized services in 2008) comes immediately to mind.

Why stop there? Perhaps Geithner intends to fire executives and directors of any company that's dependent on taxpayers and is now losing money. Just think of the corporate house-cleaning this will mean. Hundreds of agribusiness executives are now at risk as are scores of military contractors. Hell, the whole pharmaceutical industry depends on taxpayer support (research subsidized by National Institutes of Health, sales subsidized through Medicare and Medicaid), and it's doing badly, so their executives and directors will be gone soon, too.

All told, about one out of every five large American companies depends on government contracts, and a majority of these firms are losing money right now. So ... off with their heads.

Comments

[McKellin]

The Boards that award ridiculous salaries and bonuses for producing nothing should be the targets. This is the only way to change the reward structure.

[JXJASON]

Continuation

The people at the Securities Exchange Commission allowed ( through non-enforcement of of securities laws ) naked short selling.

The deregulation, in 1999, signed into law by President Clinton is also responsible for Credit Default Swaps and other "financial engineering".

The people I referred to in my previous post are suffering more that John Thain (formerly of Merrill Lynch), Jack Welch (formerly of General Electric), Warren Buffett, Bill Gates ( of Microsoft), the current and former CEO's of Fanny and Freddy, Wachovia, Countrywide, Indy Mac Bank, and the multibillionaires and multimilloinaires around the world.

The honest people in the US who worked very hard for 30 or 40 years will find it hard to retire when they have lost two thirds of their pension funds in the stock market. The people in their 20s and 30s will not want to invest in a stock market that rewards the wealthy for failure.

My mother taught me that HONESTY IS THE BEST POLICY. President Obama and his administration, hopefully, will be honest and tax the wealthy and arrest the crooks, try them, and if convicted, order restitution and put the crooks in jail.

Nothing less than this will do.

[curmudgeon3]

Geithner's best friends at Goldman Sachs undoubtedly already have their "Get Out of Jail Free" cards in hand.

[TotalRecall9]

I'll believe it when I see it. He may fire one token executive from the banks, like a Ken Lewis, just to say "see we fired somebody." But, if you think he is going to clean house, then you're dreaming. In truth, the beheadings should start with Tim Geithner & Larry Summers.

[larry278]

If Tim G, Larry S & Ben B & their employees can't or won't fire Wall St & banking execs for fouling up, Pres Obama could fire Tim, Larry, Ben & their tender hearted employees who can't or won't fire fianance's bums. Mike Bloomberg is still mayor of NYC & could get a 3d term but he could lose the election. Regardless of Mike's luck in the NYC elections, there is nothng to prevent Pres Obama from begging Mike to come to Washington, DC, save pride. Mike is smart, knows how to make money, knows how to fire people AND he's a Republican--for this week. Obama can reach across the aisle to hire a token Republican. Mike could take over Treasury as a patriotic act. Regardless of what Mike would do, he can't be worse than Tim, Larry, Ben & their employees.

[georgefrancis]

Look up the William K. Black interview on Bill Moyers Journal. It's on youtube. Pretty enlightening stuff.

[applehead]

he should fire them all and replace them with honest people who put the country in front of the desire to have more than the more they can ever spend.

[georgefrancis]

Only 10% of the bankers engaged in bad banking.

They want to fire everybody and put in whoever they want.

The bad bankers will not be fired. They work hand in hand with our politicians.

Congress is doing nothing. Guess we have to wait for the harvest.

[BarryChamplain]

Take it to the bank (no pun intended) that the GOP will develop a successful way to remarket the redistribution of wealth during the Bush administration, as a crisis precipitated by the guardians of the bailout, the Obama Administration.

This they will do, under the guise of populism. Their think tanks and p.r. firms have already organized this "populist" "tea bagging" protest, which began before Obama was even inaugurated. It is a tribute to the citizens of Dumb****istan, that with the help of Fox "News", the little dears actually believe they themselves have organized a "grassroots" movement. They are SO cute, sometimes!

And the proof that it's all a product of the Bad Guys, is how... when it was exposed to the greater public what "teabagging" actually MEANS... they did NOT QUIT. They doubled-down on the dissemination of the term. That's just so... so Karl Rove!

When the original corporate/financial thieves ride back to power in this country on "populist" wings, don't say I didn't warn ya. They'll figure out the path to pulling it off, eventually.

[cadsuch]

The bad guys really never left power. They still control all concentrated industries, which includes the news media. They still buy ink by the barrel, so there really is now change in power. Kiddies...­..we REALLY are in trouble if they ever figure out how to shut down the internet..­.....or take it over.

[UNCLEJOE]

BAILOUT PONZE SENARIO
Nancy Pelosi when asked on the April 10 Jon Stewart interview, how did the House Of Representatives decide to distribute the Stimulus Bailout $700 Billion to the banks, I was shocked to hear her answer,"That's the Secretary of Treasury's decision." meaning Timothy Geithner exclusively decided which banks got the Bailout money.

I was numb with Shock! Could you imagine Larry Summers, Obama's Chief Economic Advisor convincing Obama and the House of Representatives to give Geithner $700 Billion to indiscriminately hand out $700 Billion to his former colleges in the Federal Reserve who actually printed the phoney inflationary Fiat to give to Geithner, so that Geithner could give it back to the Federal Reserve Banks for free with the Tax payers paying the complete Bailout Bill, principle and interest to be paid back to the private foreign owned company, the Federal Reserve Bank with our grandchildren's taxes?

And our hidden taxes that increases inflation that has reduced the standard of living for Americans decade by decade with the FED's clever manipulations of our economy with their exclusive carte blanche control of our Monitary System which they were supposed to STABILIZE; the ONLY Raison d'Etre that got them CONGRESS' approval for a Central Bank CHARTER in 1913 ?

Are we a nation sailing to our doom on a Ship Of Fool's?

History will stigmatize Obama as the Father of the Mother of all Ponzi Schemes.

[JEFFERSONWASRIGHT]

Does rule of law mean anything anymore? Just so you people are aware, neither Congress, nor the President has the authority for bailouts, or for firing individuals in private businesses. Government is formed to protect property and individuals, and nowhere in the Constitution was any power delegated for such acts that are occurring today. The fact that this is occurring and that leaders are are demonizing individuals who have "committed" the "crime" of doing better than others should shame us. That it doesn't shows how far we have fallen. You wonder why people talk of taking up arms again, as we did in the War for independence, well when LAWS are being violated and property taking under threat of force, the only recourse is to fight back, particularly as we have the legal satnding for such.

[jmpurser]

So the CEO we had to pay millions of our bailout dollars to because they were much too valuable to lose can now be fired at a moment's notice?

They need to get their lies straight and stick to one set of them. This jumping back and forth is way to disconcerting!

[twofish]

Geithner doesn't intend to fire anyone. That's just tough talk for the rubes (that would be you and me). He may sacrifice one or two of his corporate buddies as part of the sideshow, but no systemic changes will be made.

There's an old saying "Trust only movement." That is, ignore what people say about what they are doing, and watch what actually happens. What I see happening is our tax money (and future money) flowing to foreign banks and other gamblers on these fraudulent securitized loan packages and credit default swaps. I see big banks getting ever bigger. I see Wall Street workers for the most part keeping their jobs and salaries and benefits (and bonuses), and autoworkers expected to give back wages and benefits or the bankruptcy court will do it for them.

In other words, movement is in exactly the wrong direction. And you know what the best joke is? If things don't improve for ordinary people, they'll punish the politicians by voting the Rethuglicans back into Congress in the 2010 midterm elections. Oh, yeah, that'll help! I'd laugh if it didn't hurt so much.

[RebootGuy]

Why does Robert Reich sound like what he's proposing is is a BAD idea? The best thing we could do as a nation is fire the top 5 executives at each major corporation who've failed in the past 5 years and replace them with new blood and new thinking, and with salaries and bonuses capped at what we pay the President of the United States.

[ativanmjs]

After less than 3 months at Treasury you want to fire Geithner, already? Did it ever occur to you that these "financial gods" that run the banks and Wall St. and the country for that matter, actually NEED to be held accountable? Now that we have a very intelligent man in the White House, the conservatives are all bent out of shape because they lost the election, they are in the minority, and they can't handle defeat. Welcome to America. It's called a Democracy. You lost. We won. Get over it. We're going to get our country straightened out and returned to the respected status in the world community we once had.

[southwindow]

who are you responding to? rebootguy didn't say anything that you responded to in his original comment.

[FireGeithner]

We need to fire Geithner and Summers, declare a "bank holiday", close all banks until they separate the banks from the gamblers, and don't let them open without strong regulation. We need to put very very high taxes on any income of any kind that is greater then 25 time the minimum wage. We need to stop the exploitation of workers world wide. Until we bring us all up together we are on a race to the bottom. Until then a fewer and fewer people will accumulate more and more of the worlds wealth letting more and more people get poorer and poorer. We need to make it easier to unionize. We need to then make sure the unions don't become corrupt. We need to stop the buying of our government officials. We need to all get involved and demand justice.

[Bonobo]

I would prefer to sidestep the MegaBank situation entirely. Instead of getting stuck in the tar baby of trying to run them and disentangle good assets from bad, disengage and let them fire themselves. Cover business lending through bridge banks or scaling up smaller non-insolvent institutions. Sure, the government's already wasted a lot of money on the Megas, but that's not a good reason to throw more into that money pit. That's Iraq-level logic.

[huffposeur]

what about major league baseball managers? and shouldn't he be able to get rid of coach K at duke for dissing obama? and jim calhoun at uconn for being snippy to a soi disant reporter?

i think obama should be able to decide not just who gets fired but who gets hired. maybe even who lives and who dies.

[Ciganka]

OMG, are we bailing out the baseball teams too?

[hypnotoad72]

Some states like to give baseball team owners taxpayer money to help build them their precious stadiums.

It's not like education, roads, defense, healthcare, et al, are anything like important by comparison­...