In my last piece, I talked about how Tim Geithner's job over the past five years has been to (a) print money, (b) give it to rich friends, and (c) deny everyone else legal and financial rights. This shows up everywhere, from the 0% you get on your savings account versus the insider information the rich get, to your lack of access to the Fed discount window. It's a symptom of bought government, which I try to expose on our show every day. (You can help by signing our petition at GetMoneyOut.com. )
I find it laughable to hear President Obama's spokesperson talking about how his campaign represents the 99%. For starters he'd have to fire Geithner, to prove he's not the leader of a bought government. After all, it is Geithner who took a system indirectly rigged to profit the 1% at the expense of everyone else, and institutionalized and formalized it during a crisis.
The reaction to my piece was explosive -- I've rarely gotten so many comments, thoughts, and questions on a single topic. So I think it's worth addressing some of them.
Here are some of your questions and comments, as well as my responses.
Casino Capitalism comments:
Any time there is talk about Obama caring about the public and latching on to OWS for his re-election campaign, there is one simple point to make - how can he possibly have any credibility when he has Geithner as Treasury Secretary. That is the single biggest indictment of Obama'sintentions.
This is absolutely true. I'll quote from Ron Suskind's new book, Confidence Men:
The thirteen bankers, and especially the half dozen titans from New York, returned to their corner offices that afternoon with very strong feelings about one man in Washington: Tim Geithner.
"The sense of everyone after the big meeting was relief," said one of the bankers. "The president had us at a moment of real vulnerability. At that point, he could have ordered us to do just about anything, and we would have rolled over. But he didn't--he mostly wanted to help us out, to quell the mob. And the guy we figured we had to thank for that was Tim. He was our man in Washington."
In public life, constituencies are important. Geithner now had one: the powerful but reviled leaders of the nation's largest banks. He'd have been loath to claim their backing, just as they'd have known not to be demonstrative with support. It was, after all, a bond of mutual desperation: both Geithner and his silent backers were fighting for survival. As one banking lobbyist said, "If Tim were fired, we'd be in trouble; we knew that." Of course, he'd have plenty of job offers in New York.
And here's Austin G:
Why haven't the bankers been prosecuted ? The simple answer is that going after them would expose the politicians who defended them. It would hurt the false narrative that has been created that blamed the crisis on corporate greed. As if companies only recently started caring about their bottom line. Companies are expected to care about their bottom line. Maintaining that bottom line means staying in business and continuing to employ people. Money is in politics because of the heavy handed interaction the government has with business. As long as that incentive exists then so will the influence. The simple reason for that is that people are corruptible. Ultimately regulation s are only as powerful as those who are to enforce them. Many of those regulators are overseen by Congress.
Three words, Austin: GetMoneyOut.com
Progressive RG adds:
Much of this was made worse when Congress, under Republican leadership, revised the bankruptcy code to prevent discharge of student debt and to prevent "cram-down" of residential mortgages. They made it extremely difficult for real human beings to discharge debt in bankruptcy allowing corporations to do it easily.
For those who aren't familiar with cram-down, it is a provision of the bankruptcy code that allows corporations in bankruptcy to wipe out loans for more than the appraised value of the collateral. If homeowners were allowed to do this, then they could force the banks to eat the depreciated value of their homes. They would still have to go through bankruptcy and would not retain wealth, but they don't have any wealth anyway. At least cram-down would allow them to keep their homes and reduce their mortgages to the current value of the home. Think how many people could have kept their homes if they were allowed to do what corporations can do!
Just another example of Dylan's point -- there are 2 classes of citizens. And the human class is considered inferior.
Yup, that's 100% true. Let's be clear, many Democrats voted for the Bankruptcy Bill as well. And there's one other unnoticed but important part of that bill. It privileged derivatives in bankruptcy over plain vanilla loans --yet another legal advantage that created two types of money.
Barrie Cowan comments:
The most frustrating feature of complaints like Ratigan's is that he does not point out what alternative courses of action were available to whom or when.
It's all very well to blame Geithner, but he would not have lasted twenty-four hours as chair of the FRBNY if he had attempted, say, in 2006, to do any of the things we all might now see that he should have done (and what were those things, anyway?)
Ratigan does not say just what Geithner should have done, because Ratigan does not have any idea what Geithner or anyone else in authority should have done to stop the disaster or when they should have done it.
The frustrating part of this is that we seem to be without a clear alternative course of action that someone should have taken at a particular time (Example: we know that the murder would not have occurred if the shooter had refrained from shooting the victim.) Jamie Dimon's theory, namely, that these things just happen now and then, is very unsatisfying; but is there something better?
Is there any such proposition, that is, who should have done what and when should he or she have done it, currently being expressed about the Economic Crisis? Can anyone state such a proposition?
I'll start by noting that the world would be better off if Geithner had only lasted 24 hours at the New York Fed. But alas, he lasted much, much longer. Ok, what should he have done differently? Why don't we start with real capital requirements? A bank with no capital requirements (or fake capital requirements), or a CDS with no capital requirements, allows nearly infinite leverage. It tends to drive out good players from the market, and then blow up the world.
From roughly the 1930s until the 1970s, there were capital requirements. And the financial system didn't go through panics and bailouts. So that's one thing.
I have a book coming out in January -- Greedy Bastards --that you might like if you want a more full explanation. Check it out.
And finally Summertown writes:
For those that didn't read the Onion piece that Dylan is referring to, stop and read it. If it is not a complete outline of what middle American is now facing then I don't know what is.
Yup, it's really eery. Here's a link.