Monday, September 7, 2009

More Global Insider Plotting

Tuesday afternoon, Secretary Geithner, who is back in Washington D.C. after the G-20 meetings in London, will meet with the Crown Prince of Abu Dhabi, Sheikh Mohamed bin Zayed Al Nahyan.

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Saturday, March 14, 2009

H. Rodgin Cohen Withdraws as Treasury Candidate

Power house lawyer, Sullivan & Cromwell's H. Rodgin Cohen, has withdrawn his name from consideration as a candidate for a Treasury position, George Stephanopoulos is reporting.

Does this mean Tim Geithner has a longer life as Treasury Secretary? Possibly.

I fully suspected that a heavyweight like Cohen was being vetted for the top spot. Cohen is the top outside counsel for Goldman Sachs and just about every other major player on the street.

The reason for the withdrawal is still unclear at this time. Stephanopoulos is merely reporting that sources are saying that an, "issue arose in the final stages "

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Sunday, March 8, 2009

The Geithner Attacks Continue

Now, it's NyPo taking a shot:

A government bailout is bad under any conditions, but Geithner
seems to let even obvious problems remain.

Eliot Spitzer warned us:

Tim is a good guy, but he’s not a thinker.

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Tuesday, February 17, 2009

Timothy Gethner: Captain Regime Uncertainty

As Bill Anderson points out, Robert Higgs in 1997 wrote one of the best and most important papers on the Great Depression called "Regime Uncertainty." It explained one of the reasons that long-term private investment stayed low throughout the 1930's: Because of uncertainty, created by government, businessmen did not make long-term investments for fear of changes in rules and regulations that might take place that would damage their investments.

Tim Geithner seems to want to prove Higgs theory correct all by himself. First, we had his absurd press conference, and now we have a leak, reported by WaPo, from the Treasury trying to explain why Geithner's performance was so bad.

The leaker is obviously Geithner, or someone close to him. The leaker tells WaPo that:

Just days before Treasury Secretary Timothy F. Geithner was scheduled to lay out his much-anticipated plan to deal with the toxic assets imperiling the financial system, he and his team made a sudden about-face.

According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers... There was one problem: They didn't have enough time to work out many details or consult with others before the plan was supposed to be unveiled.

The sharp course change was one of the key reasons why Geithner's plan -- his first major policy initiative as Treasury secretary -- landed with such a thud last Tuesday
Is Geithner really this clueless? He changed his entire rescue plan for an on the edge banking sector just days before he was to outline his plan to the country, and is now using this fact, which paints him as totally clueless, for justification for his clueless press conference. Is it any wonder the market was down by 4.0% today? Folks, this is as clear a case of regime uncertainty as you are ever going to get. Nobody has read the playbook because there isn't one. How can anyone invest in the banking sector under these clueless conditions?

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Monday, February 16, 2009

Ditching the Car Czar

I'd like to see some inside reporting on what was behind Obama's decision to ditch the Car Czar concept and, to instead, put Tim Geithner and Larry Summers in charge of auto industry monkey business. From a distance it looks like it is simply a consolidation of a bit more power in the hands of the Geithner-Summers wing of the White House.

Obama seems to be buying whatever those two are whispering.

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Saturday, February 14, 2009

Summers: Private Investors Stepping Up to Buy Toxic Assets

Larry Summers, director of the White House’s National Economic Council, said in an interveiw on Bloomberg Television’s “Political Capital with Al Hunt,” scheduled to air this weekend that “There have been many expressions of interest in providing that private capital.”

You can't know exactly what is going on here, unless you know the terms of the deals. Just what is it that private capital(read: Carlyle Group and the like) are expressing interest in? What price? What terms? What guarantees?

This smells like an insider deal from start to finish, with David Rubentein negotiating against Timothy Geithner. Geithner has a better chance in a sumo wrestling event against Mexican finance minister Agustin Carstens.

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Thursday, February 12, 2009

Was Eliot Spitzer Warning Us....

...that Treasury Secretary Geithner is not the sharpest tack in the room?--- when he said:
Tim is a good guy, but he’s not a thinker. He’s the status quo.
After Geithner's abysmal performance outlining his bailout "plan", we all know this today. But Spitzer commented about Geithner in December.

Nice call, Spitz.

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Who is Timothy Geithner?

Morgan Reynolds, who served as chief economist for the US Department of Labor during 2001–2, George W. Bush's first term, has done a little fact checking on the new Treasury Secretary:

Who is Geithner? He is a creature of the eastern banking establishment and ruling class through and through. His résumé nicely matches his actions in handing out government money and guarantees to the "right people." Geithner’s father Peter is director of the Asia program at the Ford Foundation, a New World Order operation. Peter Geithner oversaw the "microfinance" programs developed in Indonesia by Ann Dunham-Soetoro, Barack Obama’s mother. Geithner’s maternal grandfather, Charles F. Moore, was an adviser to President Eisenhower and vice president of Ford Motor Company, according to Wikipedia. Geithner’s wife Carole Marie, like Geithner a 1983 graduate of Dartmouth College (Ivy League), is daughter of Mr. and Mrs. Albert Sonnenfeld of Princeton, N.J., a professor of French and comparative literature at Princeton University (Ivy League) for 27 years.

After Timothy Geithner graduated from Dartmouth he picked up an M.A. at Johns Hopkins in something called "international economics" and East Asian studies. That is the extent of Geithner’s formal training in economics, as far as I can tell. Then he worked for Kissinger and Associates for three years, a Rockefeller satrapy, before a series of government appointments, mostly at Treasury where he was Under Secretary for International Affairs under Robert Rubin of Goldman Sachs and Rockefeller’s notorious Council on Foreign Relations (CFR) and then Lawrence Summers of Harvard University (Ivy League), World Bank and CFR. Summers, of course, is currently Obama’s head of the National Economic Council. Want a solution for the financial and economic woes? Why, hire the same experts who caused the problem(s).

Geithner departed Treasury to join the International Monetary Fund and CFR in 2001–2. In October 2003 he was appointed president of the New York Fed where he subsequently arranged rescues of Bear Stearns, AIG and other well-connected,world-class losers, all in the best interest of the American people, of course.
Did you catch this:"Peter Geithner [Timothy's father] oversaw the 'microfinance' programs developed in Indonesia by Ann Dunham-Soetoro, Barack Obama’s mother" ?

Earlier, I reported that NYT identifies Peter Geithner, in Timothy's wedding announcement, as the "program officer in charge of developing countries for the Ford Foundation." This just smells to me like a spook cover. I said so back then, before I knew about the connection between Obama's mother and Geithner's father:

One side note. Geithner graduated from the International School of Bangkok, Thailand. His father appears to be a possible CIA agent...
It makes you wonder how long "they" have been grooming Obama as the "agent of Change" president.

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Tuesday, February 10, 2009

Picking Apart the Geithner Bailout Plan, and A Real Solution

A few words come to mind when trying to understand the Bailout Plan announced by Treasury Secretary Geithner today: incomplete, clueless, odd, potentially devious, lacking in details.

It should not come as any surprise that major stock indexes slumped after Geithner unveiled the plan.

The Dow Jones industrial average dropped 381.99 points points, or 4.6 percent, to close at 7,888.88. The Dow had fallen as much as 420 points in the last half hour of trading.

The broader Standard & Poor’s 500-stock index fell 4.9 percent or 42.73 points, to 827.16.

Every sector of the market was trading lower, with the Standard & Poor’s financials index falling by more than 8 percent,and shares of Bank of America slid 19 percent.

It's clear that we now not only have a man at the Fed that is tone deaf to the markets, but also one at the Treasury.

What Wall Street wanted to see was something along this line:

There are x billions worth of bad paper out there, we are going to do y to take this off the books of banks so that these banks can function again. 

I rush to add that this would not be my proposal in a free market world view without political pressures. However, in the world of realeconomik where political matters are sadly taken into consideration, this is what was needed to be taken care of. Geithner failed.

Let's take Geithner's outline apart piece by piece.

He said:

First, we're going to require banking institutions to go through a carefully designed comprehensive stress test, to use the medical term. We want their balance sheets cleaner, and stronger. And we are going to help this process by providing a new program of capital support for those institutions which need it.
Here's the problem with this. Wall Street and investors see the problem as banks holding bad paper. The banks know what the bad paper is and they want someone to take it off their hands. A stress test sounds too much like politics still trying to kill off some players. Who and how at this point is unknown.

How would a stress test kill off some players? By defining some kind of paper as bad paper that would result in that paper being dumped by banks immediately onto the markets. Who knows who and how such paper would be defined? When the government wanted to kill the junk bond market, it ruled that banks and S&L's couldn't own junk paper even if it was sound paper unlikely to ever go bad. The junk market crash dived, good paper and bad--never too recover.

Banks are not going to hold paper that the government for whatever reason wants to declare a non-passing security in a stress test--it will be gone and muck up the markets as that type of security is sold by banks and other financial institutions across the country.

Thus,the Stress Test is a bad idea, with no real purpose.

Geithner goes on:

...alongside this new Financial Stability Trust, together with the Fed, the FDIC, and the private sector, we will establish a Public-Private Investment Fund. This program will provide government capital and government financing to help leverage private capital to help get private markets working again. This fund will be targeted to the legacy loans and assets that are now burdening many financial institutions.

By providing the financing the private markets cannot now provide, this will help start a market for the real estate related assets that are at the center of this crisis. Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets.

We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it. We believe this program should ultimately provide up to one trillion in financing capacity, but we plan to start it on a scale of $500 billion, and expand it based on what works.


There's all kinds of problems here. When Geithner says "We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it." He is telling everyone that he doesn't have a clue as to how he is going to do this. And yet, in his next breath on a clueless program, he says the program will ultimately need a trillion dollars! But since he is clueless about the program he is only going to start spending a half trillion--until, I guess , he gets a clue!!

Do you get why Wall Street might be worried?

Further what's this "private sector" stuff Geithner continues to talk about? It's the Carlyle Group and other insiders, trying to get their piece of the action. How this could possibly work is beyond me. Here's the problem, banks need to get the bad paper off the books at some kind of reasonable price so it doesn't bankrupt them. This is likely a price above market value. The players, like Carlyle Group's co-founder David Rubenstein, don't pay up for anything. Rubenstein is the type that would rather go hungry, than have to pay full price for food off of the McDonald's dollar menu.

All of this, no matter how it plays out will be very inflationary, and,  so now we have  Geithner's final element to his proposal, which is nothng but inflation at the consumer level:

...working jointly with the Federal Reserve, we are prepared to commit up to a trillion dollars to support a Consumer and Business Lending Initiative. This initiative will kickstart the secondary lending markets, to bring down borrowing costs, and to help get credit flowing again.

In our financial system, 40 percent of consumer lending has historically been available because people buy loans, put them together and sell them. Because this vital source of lending has frozen up, no financial recovery plan will be successful unless it helps restart securitization markets for sound loans made to consumers and businesses – large and small.

This lending program will be built on the Federal Reserve's Term Asset Backed Securities Loan Facility, announced last November, with capital from the Treasury and financing from the Federal Reserve.

We have agreed to expand this program to target the markets for small business lending, student loans, consumer and auto finance, and commercial mortgages.
All Wall Street hear's from Geithner here is Federal Reserve, when the Fed is involved you are talking major inflation creation, and for what? Student loans? Auto loans? Let people drive their cars a year or two longer than risk the chance of hyper-inflation.

And there you have it a clueless, inflationary plan, incomplete with plenty of room for monkey business.

Here's how I would handle the situation under realeconomiks, i.e. taking into consideration current day political pressures, rather than the type of proposal that I would recommend in a truly free market world.

I would send an announcement to every bank in America. That would read as follows: The United States Government is forming the Trash Can Bank of America. You hereby have the right to dump any trash loans you have at this bank. Send the loan to us, and as an offsetting entry, you must also send us deposit liabilities equal in dollar value to the trash loans you send us.

In this way, every bank in America would be a sound bank, since the only loans they would keep are performing loans. End of bank crisis.

As for the Trash Bank of America, the FDIC (backed up by the Federal Reserve would guaranty all the deposits). The FDIC would no longer guaranty loans at any other bank after one year. The Trash Can Bank of America would not be allowed to accept any new deposits. When someone withdraws funds, that's it they can't put it bank in that bank. The bank would pay interest equal to the average of the rates paid by the top 25 other banks in the country plus 50 basis points. As for the trash paper the Trash Can Bank of America received, it would be required to held  until maturity. However, bidders would be allowed to bid on any mortgages that are 90 days or more passed due.

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Geithner Bailout Program

Treasury Secretary Timothy Geithner today delivered an outline of the latest version of Trillion Dollar Bailout. The meat of his remarks is below. His entire speech is here.

First, we're going to require banking institutions to go through a carefully designed comprehensive stress test, to use the medical term. We want their balance sheets cleaner, and stronger. And we are going to help this process by providing a new program of capital support for those institutions which need it.

To do this, we are going to bring together the government agencies with authority over our nation's major banks and initiate a more consistent, realistic, and forward looking assessment about the risk on balance sheets, and we're going to introduce new measures to improve disclosure.

Those institutions that need additional capital will be able to access a new funding mechanism that uses funds from the Treasury as a bridge to private capital. The capital will come with conditions to help ensure that every dollar of assistance is used to generate a level of lending greater than what would have been possible in the absence of government support. And this assistance will come with terms that should encourage the institutions to replace public assistance with private capital as soon as that is possible.

The Treasury's investments in these institutions will be placed in a new Financial Stability Trust.

Second, alongside this new Financial Stability Trust, together with the Fed, the FDIC, and the private sector, we will establish a Public-Private Investment Fund. This program will provide government capital and government financing to help leverage private capital to help get private markets working again. This fund will be targeted to the legacy loans and assets that are now burdening many financial institutions.

By providing the financing the private markets cannot now provide, this will help start a market for the real estate related assets that are at the center of this crisis. Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets.

We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it. We believe this program should ultimately provide up to one trillion in financing capacity, but we plan to start it on a scale of $500 billion, and expand it based on what works.

Third, working jointly with the Federal Reserve, we are prepared to commit up to a trillion dollars to support a Consumer and Business Lending Initiative. This initiative will kickstart the secondary lending markets, to bring down borrowing costs, and to help get credit flowing again.

In our financial system, 40 percent of consumer lending has historically been available because people buy loans, put them together and sell them. Because this vital source of lending has frozen up, no financial recovery plan will be successful unless it helps restart securitization markets for sound loans made to consumers and businesses – large and small.

This lending program will be built on the Federal Reserve's Term Asset Backed Securities Loan Facility, announced last November, with capital from the Treasury and financing from the Federal Reserve.

We have agreed to expand this program to target the markets for small business lending, student loans, consumer and auto finance, and commercial mortgages.
And because small businesses are so important to our economy, we're going to take additional steps to make it easier for them to get credit from community banks and large banks. By increasing the federally guaranteed portion of SBA loans, and giving more power to the SBA to expedite loan approvals, we believe we can turn around the dramatic decline in SBA lending we have seen in recent months.

Finally, we will launch a comprehensive housing program. Millions of Americans have lost their homes, and millions more live with the risk that they will be unable to meet their payments or refinance their mortgages.

Many of these families borrowed beyond their means. But many others fell victim to terrible lending practices that left them exposed, overextended, and with no way to refinance. On top of that, homeowners around the country are seeing the value of their homes fall because of forces they did not create and cannot control. This crisis in housing has had devastating consequences, and our government should have moved more forcefully to limit the damage.

As house prices fall, demand for housing will increase, and conditions will ultimately find a new balance. But now, we risk an intensifying spiral in which lenders foreclose, pushing house prices lower and reducing the value of household savings, and making it harder for all families to refinance.

The President has asked his economic team to come together with a comprehensive plan to address the housing crisis. We will announce the details of this plan in the next few weeks.

Our focus will be on using the full resources of the government to help bring down mortgage payments and to reduce mortgage interest rates. We will do this with a substantial commitment of resources already authorized by the Congress under the Emergency Economic Stabilization Act.

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Tuesday, February 3, 2009

Treasury Secretary Timothy Geithner Dodged a Bullet...

...over his tax problems. If his confirmation hearings came after those of Tom Daschle and Nancy Killefer, he would not be Treasury Secretary today.

Still, given the news today that Tom Daschle, the former Senate Democratic leader chosen by Barack Obama to head Health and Human Services, and to lead an overhaul of health care, pulled his nomination over tax problems, and news that Nancy Killefer — nominated by Obama to be the government's first chief performance officer — failed to pay unemployment compensation tax on household help, and withdrew her nomination today, saying that she did not want to become a distraction for the administration, it is unlikely to be an easy night for Geithner.

Geithner is most likely not in serious trouble in his position as Treasury Secretary unless, and this is the key, a major player starts making some noise about the hypocrisy of Geithner overseeing the IRS while failing to pay taxes. Especially given that the Daschle and Killefer tax problems resulted in their withdrawing from consideration for their respective positions. And given their problems are at least a notch below Geithner's. (Killefer's are about a hundred notches below.)

Daschle belatedly paid $128,203 in taxes and $11,964 in interest, mostly relating to services provided to him, i.e.,access to a driver he used. While, Killefer didn't pay $995 in unemployment taxes required to be paid on household help.

On the other hand, Geithner, while working at the Word Bank, simply didn't pay required taxes on his World Bank income.

There's enough firewood, if someone wants to build a bonfire. But, no one has been spotted with lighter fluid.

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Thursday, January 29, 2009

Dissing the Dollar in Davos, Russian Style

The Russian's want to ditch the dollar as the world's reserve. On Wednesday in Davos, Prime Minister Vladimir Putin, during a speech, called for efforts to "facilitate the emergence of several reserve currencies."

Given current Fed money printing and the likely collapse of the dollar as a result, Putin's proposal may eventually gain traction internationally. There's already a good bit of de facto movement away from the dollar already.

And, note, while this is all brewing, Obama/Geithner seem to want to hasten the collapse of the dollar by calling on China to stop supporting the dollar! Madness. .

Putin wasn't the only Russian dissing the dollar in Davos. On Thursday German Gref, a former Russian Economics Minister, who is now CEO of Russia's largest bank--state-owned-- Sberbank, proposed during a panel discussion, something of a thigh slapper. In the absence of any serious competitors to the dollar, he advocated international control of U.S. monetary policy.

Since the U.S. seems to want to bring democracy to the world, why shouldn't the international community attempt to bring responsible money management to the Federal Reserve? There's kind of an international poetic justice to this Gref proposal, however, I am not planning on staying up late at night waiting for this to happen.

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Wednesday, January 28, 2009

Bunning Statement On The Hypocrisy Of Treasury Secretary Timothy Geithner

Well, somebody is awake in the Senate.

Senator Jim Bunning (R-KY) today issued a statement in regards to the hiring of a former Goldman Sachs lobbyist to serve as Chief of Staff to Treasury Secretary Timothy Geithner.

As the Bunning statement notes, this appointment came after Treasury Secretary Geithner imposed new rules restricting contacts with lobbyists at the Treasury Department.

"The hiring of a former Goldman Sachs lobbyist to be Chief of Staff to Treasury Secretary Timothy Geithner sure sends the ‘message of change’ to the American people in the middle of a financial crisis," said Bunning . "On day one, Secretary Geithner confirmed to me why I opposed his nomination to be Treasury Secretary. The appointment of this former Goldman Sachs lobbyist to be Chief of Staff flies in the face of President Obama’s guidelines on ethics. I hope for the sake of the American worker this hypocritical appointment is the only mistake Secretary Geithner makes during his tenure at the Treasury Department."

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Geithner's "Horrible Advice"

World reaction is starting to pour in regarding new Treasury Secretary Timothy Geithner's comments last week during his confirmation hearing that “Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency. The question is how and when to broach the subject in order to do more good than harm."

At the time, we wrote:

Given the collapse the dollar is likely to experience, talk like this is the equivalent of the captain of the Titanic bitching about a paint job he once saw on a fishing trawler in the South Pacific.
Economists and policy makers are meeting this week in Davos, Switzerland for the annual World Economic Forum, and teeing off on Geithner seemed to be the sport, on the first day of the meetings.

World Bank Chief Economist Justin Lin said that an acceleration in yuan gains would be “bad for China’s growth.” China’s economy is expanding at the slowest rate in seven years.

“Shouting from Washington to Beijing is not going to make a difference,” said South Africa’s Finance Minister Trevor Manuel during a panel discussion in Davos.

But the heavy artillery barrage came from Stephen Roach, Morgan Stanley’s Asia Chairman. “I’ve never seen an economy in recession voluntarily raise their currency. It’s horrible advice,” said Roach, according to Bloomberg's Simon Kennedy reporting from Davos.

Even former Treasury Secretary Robert Rubin, Geithner’s boss in President Bill Clinton’s administration, said in an interview late yesterday in New York that while it’s in the “long-run interest” of the U.S. and China for the yuan to be set by the market, “this is a time to maintain a stable financial relationship with China.”

In short, Geithner's comment shows naivete about how international matters are discussed and handled, and the international financial community knows it. They will use this to their advantage in the future.




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Saturday, January 24, 2009

Geithner Will Head Plunge Protection Team

Oh joy, John Crudele reminds us all that, as Treasury Secretary, Timothy Geithner will also head the The President's Working Group on Financial Markets, aka, the Plunge Protecton Team.

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Friday, January 23, 2009

Wall Street Rapes America, Edition 9

Wall Street is a very tough place, if you don't know what is going on, your money will be taken from you. I can't think of a more outrageous rape of the taxpayer, ever, than the TARP program run by GW Treasury Secretary Henry Paulson. It should be noted that Paulson's lieutenant in the rape of the taxpayer was Timothy Geithenr, who came up short paying his own personal taxes, but managed to help dole out $350 billion in taxpayer money through TARP and is likely to be confirmed by the Senate today as the new Treasury Secretary.

If you get the sense today that someone is laughing at you behind your back, you'll be right. It's Geithner.

Oh yeah, here's the latest outrage.

Merrill Lynch lost $15 billion in the fourth quarter of 2008 and more than $27 billion for the year. In October, Merrill received $10 billion in bailout money. But the problems were so deep that Merrill CEO John Thain(surprise a former Goldman man) sold the company to Bank of America. The actual sale to B of A was a shrewd move by Thain. It does, however make B of A look like it is run by a bunch of country bumpkins,taken advantage of by a New York slickster. We indicated as much at the time, when we wrote:

Has Bank of America Chairman Ken Lewis come to his senses? Has the ether Merrill Chairman John Thain slipped Lewis during his sales pitch to get Lewis to buy Merrill, at a premium to the market price in the middle of a crisis, worn off?
Closing date on the B of A takeover: January 1, 2009.

Employee bonuses at Merrill are normally paid out in January. Since Merrill had lost $27 billion in 2008, it is likely that Bank of America would have looked good and hard before passing out those bonuses. Thain found away around the bonus payout problem, he paid out the bonuses in December, when he was still in full control of the company. Reports indicate the bonuses amounted to between $3 billion and $4 billion.

To recap:

Merrill loses $27 billion.

Treasury gives Merrill $10 billion in bailout money.

Merrill uses the money to payout $3 to $4 billion in bonuses.

Oh yeah, Thain also spends $1.2 million refurbishing his office.

Bottom line: Wall Street has always run circles around the American taxpayer, but the Paulson-Geithner era has brought in such disrespect for the taxpayer that not even Shakespeare would have thought of penning such an open and brazen tragedy.

Middle America better wake up, and with Obama bringing "change" like Geithner into the Treasury, Barack ain't the directon from where they should be looking for change. America is burning.

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Thursday, January 22, 2009

Committee Approves Geithner Nomination

The toasting is over. The Senate Finance Committee had its little fun, but ultimately they will allow the man who played a major role in TARP phase 1, and passed out money as though it was a three dimensional surreal bingo game, the keys to, get this, the entire Treasury.

The Committee voted to approve the nomination of Timothy Geithner to be Treasury Secretary. The vote was 18 to 5. Several Republicans said they could not vote for him because of errors on his tax returns uncovered by the committee. Sen Jon Kyl, R-Ariz., said he did not believe Geithner was candid with the panel. But Democrats unanimously backed Geithner. Sen. Charles Schumer, D-N.Y., said Geithner would be an able navigator through "troubled, dangerous and uncharted waters." The nomination now goes to the full Senate floor, and is expected to be cleared easily

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A Question for Timothy Geithenr

I wonder if anyone will ask Timothy Geithner at his contnued confirmation hearing today, if he was the official that was approached by Barney Frank, when Frank sought special consideration for OneUnted Bank, or if Geithner had any role at all in the approval of money for the bank.

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Wednesday, January 21, 2009

Geithner Confirmation Likely Thursday

A Senate friend, who is closely observing the confirmation hearing of Timothy Geithner, tells me that Geithner is likely to be confirmed Thursday.

The Senate Finance Committee,for the most part, outside of Sen. Jim Bunning, has been treating Geithner as though he was the Dali Lama instead a key player in the bizarre near-criminal disbursement of the first $350 billion of TARP funds.

But, Bunning let him have it. Live blogging the hearing, WSJ reported:

Sen. Jim Bunning, the longtime Fed foe, steps onto the pitcher’s mound and starts firing. He says he had “serious reservations” even before the tax issues arose. Bunning says Geithner was “involved in just about every flawed bailout action of the previous administration.”

On the tax issues, “Mr. Geithner does not provide a satisfactory explanation for the problem, certainly not one significant for a high-ranking public official, who the American people demand and deserve to hold to a higher standard.” He says the committee has known about the tax issue since December 5 but didn’t tell members until a week ago. He also says the hearing has been rushed, and that the committee never interviewed the IRS personnel involved in the tax case. Geithner’s failure to pay all the taxes until being nominated “is hard to explain to my constituents who pay these taxes on a regular basis.”

There was no indication of a question for Geithner. But Bunning’s time was up anyway.

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Big Spender Volcker Says Trillions Will Be Needed

President Obama is pulling out the heavy guns for today's confirmation hearing of Timothy Geithner. Paul Volcker was called upon to introduce Geithner.

On my list of delusional men of integrity, along with Colin Powell, is Volcker. These men clearly believe in their integrity to search and stand for truth, but when the final actions have to be taken, they always come down on the side of the power elite. Colin Powell tells the United Nations there are WMD's in Iraq and Volcker's review of the food for oil scandal found a flunky fall guy, and never came near Kofi Annan, or for that matter Condoleeza Rice, during his investigation. (Rice was a board member at Chevron and led its public policy committee, which oversaw areas of potential political concerns for the company, at a time when even Chevron later admitted that it should have known kickbacks were being paid to Saddam Hussein on oil it bought from Iraq.)

At the hearing today, Volcker threw out this bombshell during his remarks before the hearing committee. He said that to get through the crisis, “several trillions of dollars” will be needed to commit to various government programs. Some balanced budget, inflation fighter.

As for Geithner, Volcker says he has “unique qualifications” from hands-on experience, understanding of financial markets and support of President Obama.

Translation: Leave the kid alone, we have a lot of money to spend.


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Saturday, January 17, 2009

EPJ Weekend Quiz: Can You Spot Who Is a Treasury Nominee and Who Is A "Sopranos" Enforcer?


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Timothy "Soprano" Geithner: Punk Treasury/Goldman Enforcer?

Treasury Secretary nominee Timothy Geithner, who in the past has been slow sending the Treasury tax money owed (It slipped his mind, or something) is now a reported punk enforcer for the Treasury/Goldman Sachs Family. Chris Whalen of Institutional Risk Analytics reports (Via Henry Blodgett)

To me, the apparent conflict of interest between Geithner, Hank Paulson, Robert Rubin and other principals of Goldman Sachs is Topic A for the Senate confirmation hearing. In particular, I'd like to see Paulson finally respond to the numerous FOIA requests from news organization for his telephone and email logs.

In particular, the Senate needs to focus on the reported activities of Geithner on behalf of Goldman Sachs to stop members of the media from reporting on Geithner's apparent rescue of GS by bailing our AIG. I understand that Geithner threatened a member of the NY press corps because of that journalist's reporting on the AIG rescue. I have promised said journalist not to reveal the writer's name for now, but I hope to see that writer in touch with members of the Senate minority early next week.

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Wednesday, January 14, 2009

Geithner Hearing Postponed, Again

As the tension builds, the Senate Finance Committee has for the second timed postponed Timothy Geithner's confirmation hearing. A tentative Friday date has now been moved to next Wednesday.

Geithner, whose nomination as Treasury secretary has been delayed by his past failure to pay taxes, was repeatedly advised in writing by the International Monetary Fund that he would be responsible for any Social Security and Medicare taxes he owed on income he earned at the IMF between 2001 and 2004, according to WSJ.

Current and former IMF officials said the fund provided numerous warnings to U.S. employees about payroll taxes. According to IMF documents released by the Senate Finance panel, Geithner regularly received information about his tax obligations, says WSJ.

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Tuesday, January 13, 2009

Gong Show Time for Timothy Geithner


It's roasting the nominees season.

Timothy Geithner, Barack Obama's nominee to head the Treasury, didn't pay Social Security and Medicare taxes for several years while he worked for the International Monetary Fund.

The IMF and World Bank reimburse employees, including U.S. citizens, for their U.S. income taxes. They don't, however, make contributions toward Social Security and Medicare taxes, which individuals are expected to pay on their own.

In 2006, the IRS conducted a letter audit of Geithner's 2003 and 2004 taxes and concluded he owed taxes and interest totaling $17,230, according to documents released by the Senate Finance Committee. He paid up and the IRS waived the related penalties.

But, according to WSJ:


During the vetting of Mr. Geithner late last year, the Obama transition team discovered the nominee had failed to pay the same taxes for 2001 and 2002. "Upon learning of this error on Nov. 21, 2008, Mr. Geithner immediately submitted payment for tax that would have been due in those years, plus interest," a transition aide said. The sum totaled $25,970.

The Obama team said Mr. Geithner's taxes have been paid in full, and that he didn't intend to avoid payment, but made a mistake common for employees of international institutions. That characterization was contested by Senate Finance Republicans, who produced IMF documents showing that employees are repeatedly told they are responsible for paying their payroll taxes...

Other tax issues also surfaced during the vetting, including the fact Mr. Geithner used his child's time at overnight camps in 2001, 2004 and 2005 to calculate dependent-care tax deductions. Sleepaway camps don't qualify.

Amended tax returns that Mr. Geithner filed recently include $4,334 in additional taxes, and $1,232 in interest for infractions, such as an early-withdrawal penalty from a retirement plan, an improper small-business deduction, a charitable-contribution deduction for ineligible items, and the expensing of utility costs that went for personal use
Geithner prepared his own tax returns in four of the years in question. Economist Magazine tells us he is, "a quick learner: within a year of joining the New York Fed he could debate the intricacies of monetary policy with academic experts." The current revelations suggests he is either not a quick learner, or a tax cheat---or both.

And don't forget, Geithner once said, “Most consequential choices involve shades of gray, and some fog is often useful in getting things done."

Geithner's biggest problem: The IRS is a division of The Treasury. The folks back home aren't going to be happy with a tax cheat running the Treasury. The blogs are blowing up on this one.

A tentatively scheduled confirmation hearing Tuesday for Geithner was canceled.

But grab a cold one, popcorn and get comfortable in your easy chair. These roastings are about the only time you get your moneys worth from government. It won't matter policy wise whether Geithner is shot in public or given the medal of honor, he is just a tool in the machine. If the heat gets too intense, and he bails, or is forced to bail, the Council on Foreign Relations and the Group of Thirty (Geithner is a member of both) have plenty of other soldier recruits waiting in line. For the powers that be, this is what California's Jerry Brown once called the presidential nomination process, "a Gong Show for the rich".

A new confirmaton hearing is now scheduled for Friday.

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Thursday, December 18, 2008

Eliot Spitzer Speaks About the Incoming Treasury Secretary; Reports Losing Money in Madoff Scam

When your political career is shot candor becomes easier.

Spitzer has begun writing a bi-weekly column for Slate, and he attended Slates' Christmas Party, where a group of journalists were able to throw a few questions at him.

Vanity Fair's Maureen Tkacik asked the question that clearly signaled Spitzer's political life is, for now, over, as he gave a lukewarn endorsement of the incoming Treasury Secretary:
I asked Eliot Spitzer what he made of incoming Treasury Secretary Tim Geithner, and sure enough he gave a reply markedly lacking in discretion: “Tim is a good guy, but he’s not a thinker. He’s the status quo."
At the party, he also spoke to Henry Blodget:

Add the name Eliot Spitzer to the list of prominent people allegedly ripped off by Wall Street trader Bernard L. Madoff. Yesterday at Slate's holiday party Spitzer, who is writing a column for the online publication, confirmed that his family's firm had investments with a Madoff subsidiary.

The former governor said that he never met Madoff and wasn't into "the Palm Beach scene," which he described as stuffier than he prefers, but did confirm that his family real estate firm lost money. He shrugged his shoulders in a "what can you do" way, and seemed in good spirits as he talked and joked with the crowd of mostly journalists.

At one point, On the Media's Brooke Gladstone, who like Spitzer is Jewish, joked that "Bernie Madoff was worse for the Jews than anyone since David Berkowitz" and Spitzer replied, "Well, I was New York's second Jewish governor and look what I did."
FT's John Gapper asked him about his becoming a wordsmith:

I went over afterwards to ask him how he was enjoying life as a columnist. “It sucks,” he said with a grin. “I used to be governor of New York”.

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Wednesday, November 26, 2008

Goldman Sachs Starts the Avalanche That Will Crowd Out Non-Connected Borrowers

Goldman Sachs yesterday became the first US bank to issue debt backed by the Federal Deposit Insurance Corp under yet another new Paulson/Geithner government plan to shovel money to the politically connected. Goldman raised $5 billion.

Under this program, money raised is guaranteed by the FDIC, which makes it as good as a Treasury raise. Among others, JPMorgan and Morgan Stanley, GE Capital are all expected to follow Goldman.

When all is said and done. $300 billion is expected to be raised by this program. That's $300 billion that won't be available to non-bank, non-privileged elite.

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Tuesday, November 25, 2008

Does Geithner Have The Chops To Be Treasury Secretary?

Hmmm, the long knives are out for Geithner.

NYT's Andrew Ross Sorkin makes a deep stab with this hit piece.

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Monday, November 24, 2008

Geithner Is the Greatest (Possibly a Genius)....

...says Carlyle Group's Randal Quarles, who will probably soon be asking Geithner for money, when Carlyle starts its bank buying binge.

"He's a very strong choice for some very specific reasons," Quarles told On Wall Street. "He has a wealth of experience at the Treasury and Federal Reserve. He's been intimately involved in dealing with the financial crisis. And before the financial crisis he was very thoughtful and involved in trying to reduce some specific risks in the system."

Before the crisis he was involved in trying to reduce some specific risks in the system? Oh yeah, that worked well.

Quarles has already managed to get Boston Private Financial Holdings Inc. $150 million in capital through the Paulson program.

Ht2peu

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The Obama Economic Team

President-elect Barack Obama officially announced key members of his economic team today. The new appointees—and short profiles—are listed here:

Timothy F. Geithner, Secretary of the Treasury

A Rubin robot.

See full profile here.

Lawrence H. Summers, Director of the National Economic Council

A Rubin robot.

Obnoxious.

Situated in the White House, he will have regular access to Obama.

Jackie Calmes writes:


Summers, who may well end up being Obama's closest economic adviser, has been especially public in calling for a big stimulus package. Many saw his touch in Obama's call this weekend for the stimulus plan to create or save 2.5 million jobs.

Doesn't understand basic economics, see here and here.

Christina D. Romer, Director of the Council of Economic Advisors

A Keynesian, but actually appears to pay some attention to the money supply as an influence on the business cycle. See here.

Melody C. Barnes, Director of the Domestic Policy Council

A George Soros operative. She has served as Executive Vice President for the Soros front, The Center for American Progress. She also served as chief counsel to Senator Edward M. Kennedy on the Senate Judiciary Committee from December 1995 until March 2003.

Heather A. Higginbottom, Deputy Director of the Domestic Policy Council


Higginbottom founded and served as Executive Director of the American Security Project, which has been supported by the anti-war Gary Hart. Her stand on domestic policy issues is unclear.

Best hope for economic sanity out of this group is from Romer. But when you are reaching into Berkeley, of all places, for economic hope, you are obviously not talking about a Milton Friedman protege.

Possible sanity on war from Higginbottom.

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It's The Rubin Robots

Jackie Calmes at IHT fills in more pieces to the puzzle:

It is testament to former Treasury Secretary Robert Rubin's star power among many Democrats that as President-elect Barack Obama fills out his economic team, a virtual Rubin constellation is taking shape.

The president-elect's choices for his top economic advisers — Timothy Geithner as Treasury secretary, Lawrence Summers as senior White House economics adviser and Peter Orszag as budget director — are past protégés of Rubin, who held two of those jobs under President Bill Clinton. Even the headhunters for Obama have Rubin ties: Michael Froman, Rubin's chief of staff in the Treasury Department who followed him to Citigroup, and James Rubin, Rubin's son.

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LOL: Krugman Blames Lame Duck Bush Administration for Rape of Taxpayers in Citi Bailout

Says Krugman:

Amazing how much damage the lame ducks can do in the time remaining,


In fact, this bailout has Citigroup vice-president and "senior counselor" Robert Rubin's fingerprints all over it. And that means the incoming Obama team was all over the deal, since Rubin's robots are all in position to run Obama economics. And, don't forget, the next Treasury Secretary, Tim Geithner, a Rubin robot, was also in the room that cut the Citi deal. Geithner is current NY Fed Prez and future Treasury Secretary, do you think he might have had some say in this new rape of the taxpayer?

The Bush Administration was at the scene of this crime, but, make no mistake, the capo in charge was Obama's man Rubin. Nothing in this bailout would have changed in a post Jan. 19 bailout.

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Sunday, November 23, 2008

It's the Robert Rubin Wing Of Goldman Sachs That Will Be In Charge of Obama Economic Policy

So says WSJ:

The new economic team emerges from the Democratic Party's moderate flank, with Mr. Rubin as the common denominator. Mr. Summers was Mr. Rubin's longtime deputy at Treasury and then succeeded Mr. Rubin as Treasury secretary. Mr. Geithner was a senior aide at Treasury during this period.

Peter Orszag, who will be Mr. Obama's budget director, was the first director of the Hamilton Project, a program co-founded by Mr. Rubin at the Brookings Institution, a think tank...

Rubin was Vice Chairman and Co-Chief Operating Officer from 1987 to 1990. From the end of 1990 to 1992, Rubin served as Co-Chairman and Co-Senior Partner along with Stephen Friedman. He then served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations.

He now is Director and Senior Counselor of Citigroup where he draws an annual salary of $17 million.

The supermerger between Travelers Group and Citicorp was facilitated by the repeal of the Glass-Steagall Act (Gramm-Leach-Bliley Act). This legislation was passed under the Clinton administration, days before Rubin's resignation. Some believe that Rubin's $17 million Citi salary is quid quo pro for his role in the repeal of Glass-Stegall.

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Saturday, November 22, 2008

A Geithner Treasury Will Mean Major Changes In Financial Regulation

Tim Geithner clearly does not understand free markets. He sees market failures where the government must intervene to fix things. In Geithner, the Treasury will be run by a micro-managing interventionist.

Here Geithner's own words about financial regulation.

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Timothy Geithner on the Usefullness of Fog

“Most consequential choices involve shades of gray, and some fog is often useful in getting things done." From WSJ as quoted by NYT.

Sounds like a real open truth teller, along the lines of Dick Nixon.

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Bailouts Geithner Has Been Involved With

Barack Obama's choice for Treasury Secretary, Timothy Geithner, should be called the Bailout King. According to NYT:

[H]e was involved in the bailouts of Mexico, Indonesia, Korea, Brazil and Thailand.
This is in addition to his recent roles in the bailouts of Bear Stearns and American International Group, and Treasury Secretary Paulson's $700 billion boondoggle.

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Friday, November 21, 2008

Tim Geither In Profile

According to various news sources, Tim Geithner will be nominated as Treasury Secretary by Barack Obama. An official announcement is expected Monday.

Judging by his actions it does not appear Giethner believes in free markets. For him, the government needs to stand by with buckets and buckets of money.

According to reports, in 1997 he was instrumental in pushing then Treasury Secretary Rubin to OK a bailout of South Korea.

Geithner also was reportedly behind the $29 billion guarantee against losses that the Fed made to JP Morgan when JPM purchased Bear Stearns. The guarantees against losses, it should be noted was in addition to the fact that JPM stole Bear Stearns at a huge discount from its liquidation value.

His interventionist credentials are pretty well established on Wall Street. Here's Larry Kudlow's thinking on Geithner ans the next tranche of the $700 Billion Paulson boondoggle:

As for the TARP bailout story, it is generally believed that Geithner is a strong interventionist. And so we can expect him to move toward raising the second $350 billion tranche of the originally authorized $700 billion package by Congress
.

Geithner graduated from Dartmouth College with a bachelor’s degree in government and Asian studies in 1983 and from the Johns Hopkins School of Advanced International Studies with a master’s in International Economics and East Asian Studies in 1985, according to his official bio on the New York Fed site.

He joined the Treasury in 1988 and worked in three administrations, serving as Under Secretary of the Treasury for International Affairs from 1999 to 2001 under Treasury Secretaries Robert Rubin and Larry Summers.

He also worked for Kissinger Associates for three years.

He become New York Fed president in 2003. In that capacity, he worked as the vice chairman and a permanent member of the Federal Open Market Committee, the group responsible for formulating the nation's monetary policy.

One side note. Geithner graduated from the International School of Bangkok, Thailand. His father appears to be a possible CIA agent and is listed by the New York Times as the "program officer in charge of developing countries for the Ford Foundation."

Geithner falls under the Robert Rubin wing of Goldman Sachs influence, as he worked for Rubin when Rubin was Treasury Secretary.Geithner also serves as chairman of the G-10’s Committee on Payment and Settlement Systems of the Bank for International Settlements. He is a member of the Council on Foreign Relations and the Group of Thirty.

But it is his interventionist bent that could prove we have a major inflationist at Treasury. One Obama confident relates a recent conversation between an associate and a Fed official, in which the latter complained, "Christ, Geithner wants to save everybody."

More money hand outs to Wall Street, no wonder the market jumped 500 points on news of the Geithner selection.

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Geithner to Be Nominated as Treasury Secretary

President-elect Barack Obama plans to announce his economic team on Monday and will name New York Fed President Tim Geithner his nominee for Treasury Secretary, NBC News is reporting.

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Saturday, September 13, 2008

SEC Statement On Emergency Meeting

FOR IMMEDIATE RELEASE
2008-196

Washington, D.C., Sept. 12, 2008 — The U.S. Securities and Exchange Commission tonight issued the following statement:

Senior representatives of major financial institutions are meeting at the Federal Reserve Bank of New York Friday evening to discuss recent market conditions. Also participating in the meeting are Treasury Secretary Henry M. Paulson, Jr., U.S. Securities and Exchange Commission Chairman Christopher Cox, and Federal Reserve Bank of New York President Timothy F. Geithner.

-EPJ Original Documents

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Friday, September 12, 2008

NY Fed Holding Emergency Meeting On Lehman's Future

From WSJ:

In attendance are New York Fed President Timothy Geithner, Mr. Paulson and Securities and Exchange Commission Chairman Christopher Cox. The Wall Street executives included Morgan Stanley Chief Executive John Mack, Merrill Lynch Chief Executive John Thain, J.P. Morgan Chase CEO Jamie Dimon, Goldman Sachs Group CEO Lloyd Blankfein, Citigroup Inc. head Vikram Pandit and representatives from the Royal Bank of Scotland Group PLC and Bank of New York Mellon Corp., among others.

-EPJ Newsdesk

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