Relevant and even prescient commentary on news, politics and the economy.

Geithner’s Baa Humbug to Jobs and Labor

Dan here…Taking a look back to 2009:

Geithner’s Baa Humbug to Jobs and Labor 12/25/2009

(h/t Run75441)

“Ebenezer: Since you ask me what I wish sir, that is my answer. I help to support the establishments I have named; those who are badly off must go there.”

Daniel Gross at Slate interviews Tim Geithner here: “We Will Be Judged on How We Dealt with the Things that were Broken” Some rather revealing statements by Tim Geithner to Daniel Gross’s questions:

GROSS: There’s a perception that you regard your portfolio narrowly, as primarily focused on the health of Wall Street, with Main Street a distant second.

GEITHNER: “My first and essential responsibility was to fix and reform the financial system. That was necessarily going to be the principal part of what people saw. About half my time from the beginning has been spent on the design of the broader economic strategy. The idea that we did not do much for the broader challenges facing the country is completely unjustified. The Recovery Act itself was not just a sweeping, essential force for growth but included a bunch of targeted investments in education, energy, environment, health care that will have huge long-term benefits.”

(Run here: Geithner misses the point or makes the point that finance is the number one concern over Main Street, even though Main Street is financing the rescue of W$. The constituency doesn’t want charity in targeted investments in education, energy, education, and environment when it can pay for those investments itself if they are working. Main Street wants jobs? Main street is still waiting for that tsunami of job creation which is one of the broader challenges of any administration and no administration has put into play any package to stimuli it or companies to do more. Jobs are left to free market influences which is content with investing profits elsewhere other than job creating infrastructure.)

GROSS: So you don’t think the bailouts were too friendly to Wall Street?

GEITHNER: “The idea that the strategy was unfair and has principally benefited a small number of institutions in New York is a mischaracterization of the design and result of the strategy. I thought people would have understood this after the failure of Lehman Bros. But when you do too little and you leave the system with real fear that everything is going to fall apart, like any financial crisis, it hurts the poorest most. A just and fair strategy, even if it is politically hardest to explain and justify, is to use well-designed but massive force to stabilize the system.“

(Run here: Over at Naked Capitalism, they are debating whether Goldman Sachs drove the collapse of AIG by calling for the mark down of CDO by companies holding too many of them thereby forcing AIG to raise collateral after it was downgraded and eventually paying off on CDO that never were expected to payoff. While AIG is at fault for seeing too many pie in the sky dollars in risk and having too little collateral to cover it, one has to wonder why Goldman Sachs should have received 100% on the dollar on its CDS for its risk with AIG and not knowing how over leveraged AIG was at the time. Goldman Sachs certainly benefited by Geithner’s negotiated settlement of AIG’s liabilities at 100% on the dollar.)

GROSS: The biggest downside surprise?
GEITHNER: “The [high] level of unemployment relative to what was happening in the economy as a whole. I’m not an economist, but almost all forecasters missed that. And that’s hugely consequential, because it’s the prism through which most people view basic economic health.”

(Run here:He is kidding right? During every economic downturn, it has consistently been Main Street that has been shown the street from their jobs or homes.)

Tags: , , , Comments (1) | |

Postscript Regarding Geithner

I’ve spent yesterday and this morning saying here that I suspect that Geithner played some role in persuading Obama himself to decide that the Justice Dept. should not do much to investigate whether there was criminal conduct by top execs at the big banks, the big investment banks, and the big mortgage companies–but also saying, this morning, that if so, I think it was because of a legitimate belief that pursuing past criminality as criminality rather than through civil cases alone, would undermine those institutions’ solvency and thus the larger economy.  

It’s a believe that, at least regarding such big-name mortgage firms like Countrywide and its CEO, and in my opinion, against big-name execs of the banking institutions, makes no sense. Which does suggest some direct culpability by the Justice Dept., although it doesn’t answer the question of Geithner’s role, if any.

But a lengthy article about Geithner in today’s Washington Post by Zachary Goldfarb does make the point that Geithner apparently has been a strong proponent of tough new laws and regulations regarding the finance and securities industries, and, presumably, tough enforcement of the laws and regulations, old and new, going forward.  At least that’s what the article says.  

Which makes the separate, if inferential, point, that, regarding the Obama administration and (I suspect) regarding Geithner, there are two distinct issues: what was to be done about the past, and what is to be done in, and about, the future.

I’m shooting for this to be my final word on all this. So that I won’t keep shooting myself (and my reputation as a stellar financial-industry expert) in the foot.

Tags: , , Comments Off on Postscript Regarding Geithner | |

Are Lanny Breuer and Eric Holder taking the hit for … Tim Geithner? UPDATED

After reading Ken Houghton’s post immediately below, and then clicking on the Twitter exchange that Ken, Dan and Yves referenced, in which the Frontline reporter, Martin Smith, said he’d received a call from the Justice Department saying that the reporter had come with an agenda and that the Obama Justice Department would not again cooperate with Frontline, I’m wondering whether Lanny Breuer and Eric Holder are taking the hit for … Tim Geithner.

The more I think about it, the more I think that that’s the most likely scenario.  It almost seems like Geithner had Obama hypnotized–that he always managed to scare Obama just about to death with “But the banks will COLLAPSE!”

If this is what happened, then whoever at the Justice Dept. who called Smith might actually be hinting that Smith should probe further–say, into the Treasury Dept.–to find the full background.  

I mean, how in heaven’s name were those lawyers for the banks and the bankers getting that kind of access to the Justice Dept.’s Criminal Division?  How likely is it, really, that this was simply that that asked Breuer or Holder?  Or that they even contacted either of them directly?  Just a hunch here, obviously, but my guess is: not much.  

So maybe Breuer’s the good guy, after all.  Maybe he was fighting behind the scenes against acceptance of what was being sold at those presentations.  Which would explain the anger of the Justice Dept. person who called Smith.   


UPDATE:  In response to reader rjs’s comments in the Comments threat, I responded:

The reason that I thought, in reading some of this stuff, that Geithner might have played a role in it is that Geithner is the one who always seemed to have the executives’ backs. Covington & Burling can argue all it wants that huge damage to the economy, and to innocent employees, would result from indictment of the banks themselves, but the banks would not go under if specific individuals were indicted. Covington & Burling represents the banks, not the executives as individuals. So why weren’t any individuals–any executives–indicted?

Breuer says there was no evidence of intent to defraud, but that seems unlikely, unless the DoJ didn’t look for any.

The bottom line is that Breuer and Holder certainly look culpable, and that you’re right, rjs, that Breuer probably was not arguing quietly for indictments against executives. But is that all there is to it?

At least this finally exposes the sickening, sickening symbiotic relationship between the top officials in the DoJ and big-name Washington white collar criminal defense law. And it’s not a good thing for Obama to have renominated Holder as AG.

So the answer to the question in the title of this post–”Are Lanny Breuer and Eric Holder taking the hit for Tim Geithner?”–seems to be, no.

Tags: , , , , , , Comments (15) | |