Restart Those "Geithner Goes" Office Pools

Whoever, in the first round, got a date in 2010, for when Secretary of the Treasury Timothy Geithner takes a hike, forced or otherwise, may be looking a bit more optimistic today;



Geithner’s New York Fed Told AIG to Limit Swaps Disclosure Share Business Exchange

The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

The New York Fed took over negotiations between AIG and the banks in November 2008 as losses on the swaps, which were contracts tied to subprime home loans, threatened to swamp the insurer weeks after its taxpayer-funded rescue. The regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.”

Oh, Timmy, you didn't do that ...

Oh, Timmy, Timmy, Timmy ...

There's little refuge out there, Timmy.

Henry Blodget;

Bloomberg unearths more details on the nauseating bailout of AIG and the 100-cents-on-the-dollar payouts to Goldman, et al.

Once again, Tim Geithner was in charge.

Barry Ritholtz;

Between Summers and Geithner, it appears that President Obama has made the exact same mistake that one George W. Bush did: Instead of filling his administration’s most important posts with his own people, he reached back to prior admins (Cheney, Rumsfeld, etc) and loaded up on incompetent retreads.

Barack W. Obama indeed . . .

Felix Salmon points out another fact that Timmy, probably, would like to bury;

Michael Corkery also points out that all of this secrecy coincided with Geithner’s nomination to be Treasury secretary, which makes the whole thing stink much more: was Geithner deliberately trying to keep anything potentially damaging secret for the sake of his own personal career progression?

And, Edward Harrison, writing on Naked Capitalism, just lets it all out;

Let me add a few words to Yves’ last post because I don’t think she was explicit enough about what’s going on here. This was looting and a cover-up plain and simple.

[snip]

He was on the job when these firms levered up and took reckless risks that endangered our financial system. For him to absolve himself of responsibility is a disgrace. And to add insult to injury, we now learn that he urged a systemically important company to withhold evidence of his looting of taxpayers.

Tim Geithner must go

Now, we wait, to see what Congress does, and if they will go after Geithner, and, for that matter, Heistin' Hank Paulson, for their total scam rip-off of the Treasury, the citizens, the country.

And, for those holding squares, say, in Spring (the Obama White House will want to get this off the radar well before the Fall Midterms), you're sitting pretty ...


Bonus Riffs

Susie Madrak: Geithner to AIG: Let's Keep This Under Our Hat, Okay?

Cynthia Kouril: Geithner’s New York Fed Ordered AIG to Violate Securities Law in 2008

Breaking! ... Obama Takes Action, Siezes AIG's March Madness Office Pools and Brackets

Blame?

This Didn't Make The 11PM News ...

Greed Has A Name ...

Top Ten Cloves: Ways Tim Geithner Will Fire Bank CEO's

News Item: Geithner Grows A Spine!

10. Use them as Human Shields, when Obama goes to speak at Notre Dame

9. Throws'em in Debtors Prison

8. Put them through the Obama Team Vetting process - They'll quit after months of frustration, waiting ...and waiting ...and waiting

7. Label them as Toxic Assets so they will move in the upcoming auctions

6. Rounds'em all up and ships them to Sweden

5. Beats them to within an inch of death with a new, giant bailout check

4. Gets Rush Limbaugh to take them out of town with him

3. Hires Rick Santelli to browbeat them, yelling and screaming, until they run out the door

2. Have one of his staff do the deed ... Oops!

1. Well, actually, before he does any firing, he has to talk Larry Summers, and get approval for the plan


Bonus Secretary of the Treasury Timothy "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner Riffs

James Doran: US watchdog calls for bank executives to be sacked

Henry Blodget: The Question Tim Geithner Refuses To Answer

John Carney: Geithner Wrong, Crap Assets Correctly Priced, Say Harvard And Princeton Profs

Jeffrey Sachs: The Geithner-Summers Plan is Even Worse Than We Thought

Robert Reich: Will Geithner Fire Corporate America?

Glen Greenwald: Larry Summers, Tim Geithner and Wall Street's ownership of government

Mike Madden: Pay no attention to the treasury secretary behind the curtain ...President Obama figures out the key to selling his economic policies: Hide Tim Geithner

In A Nutshell ...

They should have a big, confetti-falling, band-playing, ribbon-cutting ceremony at 30 Rockefeller Center in the coming days.

Perhaps to distance themselves from their own folly, their front-row cheering of the Wall Street Meltdown, General Electric will be changing the name of its' flagship business channel, giving it a dose of "truth in advertising".

No, they don't need to do esoteric, like Xe.

In fact, they can keep the same call letters, CNBC.

Just now, they translate to Can Not Be Credible.

For CNBC's Mark Haines to say to someone (and elected member of Congress, to boot), criticizing the Wall Street Meltdown, the naked, obscene raping of the financial system, to the point of complete ruin, that the steps to correct it are "Witch Huntery", says, in the nutshell, how in-the-tank Can Not Be Credible is, and how screwed the "media" really is (or, how screwed we really are).

Rep. Sherman (D-CA) vs. CNBC's Mark Haines



"What do people on Main Street know about running a financial system?"

Well, Mister Mark Haines, we don't have to look back to sepia-colored history, to turn that question around on you, and ask "What do people on Wall Street know about running a financial system?"

Hilzoy, over on Obsidian Wings, in fact, illustrates that point rather well;

A couple of years ago, it would have been hyperbole to suggest that we would all be better off if the senior executives at all our major financial firms were people picked entirely at random out of the phone book. Now, it's arguably true. People picked at random would, admittedly, be likely not to have been to business school. They might not know a lot about futures or derivatives or put options. But so what? At least they might have been more likely to know that they were clueless, and a few of them might have had the common sense to ask questions like: will housing prices really go up indefinitely?

In any case, what's the worst they could have done? Bankrupted their companies with ludicrously risky gambles that fell apart once markets went south? Destroyed trillions of dollars in value? Brought the world financial system to the brink of collapse? Left taxpayers across the globe on the hook for trillions of dollars? Bankrupted entire countries?

Oh, right.

And Now, We Come To The Sanity Clause

It may, or may not, be accidental, that news of the long-awaited Geithner-created, Obama Administration plans for the failed banks, stocked to the brim with those "toxic assets", was leaked out, just as March Madness was getting underway.

Perhaps they were looking for a "Cinderella Story" run with it, however, the early reviews coming in show it getting bounced, in the first round.

Nobel Prize winner Paul Krugman was brought to "Despair" over it, citing "The zombie ideas have won";

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

[Snip]

But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

A few hours later, Krugman, still despaired, added;

Why am I so vehement about this? Because I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second. So it’s just horrifying that Obama — and yes, the buck stops there — has decided to base his financial plan on the fantasy that a bit of financial hocus-pocus will turn the clock back to 2006.

Economist James K. Galbraith;

If I'm right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn't participate in the garbage-loan frenzy.

Publius, on Obsedian Wings, heralds that "This banking business may well be Obama’s Vietnam ...", while Frank Rich, today, slaps Obama upside the head, respectfully, but forcefully, pointing out that his "Katrina Moment" has arrived.

Digby, perhaps, got it down, on what Obama, Summers and Geithner must need, to either breath life into the plan, or themselves, with "Clap Louder".

Well, not only "Clap Louder", but yell, scream, jump up-and-down, louder, until it is a deafening roar, is, apparently what is needed.

After the last eight-years, "trust us" isn't going to cut it, something Glenn Greenwald got into yesterday;

This anti-anger consensus among our political elites is exactly wrong. The public rage we're finally seeing is long, long overdue, and appears to be the only force with both the ability and will to impose meaningful checks on continued kleptocratic pillaging and deep-seated corruption in virtually every branch of our establishment institutions. The worst possible thing that could happen now is for this collective rage to subside and for the public to return to its long-standing state of blissful ignorance over what the establishment is actually doing.

[Snip]

Atrios has been writing a version of the same key observation virtually every day for weeks -- that almost every plan to "solve" the financial crisis involves nothing more than transfers of enormous amounts of public money into the pockets of the same unchanged system and the same people who caused the collapse in the first place:

The issue is that [Geithner] and friends never distinguished between bailing out the system and bailing out the players. There was a way to do that, and they didn't do it.

[Snip]

The AIG scandal vividly reveals how corrupt and self-interested are the people who are still exerting primary control over this process, which is why our establishment class is so eager to demand that everyone look away. For months, Americans have been told that they must sacrifice and trust the Government to engage in extraordinary actions if they want to stave off another Great Depression, only to watch as hundreds of billions of dollars fly to the very people who are the prime culprits. As Jane Hamsher put it: "The 'populist rage' that the pundits find so unseemly is actually the appropriate response."

But Wait!

Matthew Yglesias is optimistic, and Brad DeLong weighs in on the positive side;

Q: This sounds very different from the headline of the Andrews, Dash, and Bowley article in the New York Times this morning: "Toxic Asset Plan Foresees Big Subsidies for Investors."

A: You are surprised, after the past decade, to see a New York Times story with a misleading headline?

Q: No.

A: The plan I have just described to you is the plan that was described to Andrews, Dash, and Bowley. They write of "coax[ing] investors to form partnerships with the government" and "taxpayers... would pay for the bulk of the purchases..."--that's the $30 billion from the private managers and the $150 billion from the TARP that makes up the equity tranche of the program. They write of "the Federal Deposit Insurance Corporation will set up special-purpose investment partnerships and lend about 85 percent of the money..."--that's the debt slice of the program. They write that "the government will provide the overwhelming bulk of the money — possibly more than 95 percent..."--that is true, but they don't say that the government gets 80% of the equity profits and what it is owed the FDIC on the debt tranche. That what Andrews, Dash, and Bowley say sounds different is a big problem: they did not explain the plan very well. Deborah Solomon in the Wall Street Journal does, I think, much better. David Cho in tomorrow morning's Washington Post is in the middle.

Krugman still isn't on-board;

And a final point: I’m with Atrios here. If getting the prices of toxic assets “right” isn’t enough to rescue the banks, that doesn’t mean that we’re doomed; it means that we actually have to, you know, rescue the banks, Swedish style, rather than rely on fancy financial engineering to make the problem go away.

"I'm with Atrios?"

Actually, it's worse than that, it's "If Timmeh is wrong about the ponies in Big Shitpile then it's Mad Max for all of us."

But, this all gets put in motion, tomorrow morning, before the opening bell of trading, when Tim "What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!" Geithner meets with reporters and lays it all out.

Then, we wait and see.

Either the economy starts its' Herculean rise, and money is flooding the streets like a summer cloudburst, or, it's Harry Lime time;

"...and don't be so gloomy. Remember what the man said: under the Borgias there was warfare, bloodshed and murder and they had Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland they have brotherly love, 500 years of democracy and peace. And what have they produced? The cuckoo clock! ..."

Start Cutting The Squares For The Office Pool On Geithner Exit?

If there is such a trophy, or award, the headline-of-the-day goes to Will Bunch, over on his Attytood blog;

What's that, Lassie? (Woof, woof!!) Timmy Geithner's in the well?!!

There's a lot of ways to measure a good-to-great president. We tend to focus on both their policies and their skill in communicating with the American people, but another key task is the ability to admit mistakes, especially when it was a doozy. Remember JFK and the Bay of Pigs early in his presidency?

And Timothy Geithner as President Obama's Treasury Secretary is looking like another one of these.

The New York Times has a comparable, but more reserved story today, as well;

Geithner, With Few Aides, Is Scrambling

Rarely have so few people had so little time to prop up so many pillars of the economy as those in the Treasury Department under Timothy F. Geithner.

In the six weeks since Mr. Geithner took over as Treasury secretary, he and a skeleton crew of unofficial senior advisers have been racing to make decisions that will shape the future of the banking, insurance, housing and automobile industries. 

But even as he maintains a frenetic pace — unveiling plans, testifying before Congress and negotiating new bailouts with the likes of Citigroup, General Motors and the American International Group — there are signs that events are getting ahead of him.

And, here's some recent headlines on our new Secretary of the Treasury.

Former Australian Prime Minister Savages Geithner's Performance in the Asian Crisis

Geithner goes for a laundry list, not a dramatic gesture

Geithner Backs The Elites

Lawmakers laughed at Geithner plan

Geithner Bank Bailout Plan: Fiasco

Add to this, one big-byline blogger has directly called for Geithner to go;

Henry Blodget - Time To Fire Tim Geithner

We don't mean to sound impatient, but we've seen enough. The country is in the middle of the worst financial crisis in 75 years, and the second-most-important person in charge clearly isn't the right man for the job.

When both engines on US Air Flight 1549 quit after takeoff, Capt. Sullenberger did not cling stubbornly to his preconceived view of the situation. He did not float endless versions of the same bad plan to air traffic controllers to see what they thought of them. He did not spend months preparing for a moment just like this only to be seized by indecision when it arrived.

Instead, he just took the controls and landed the plane in the Hudson.

[Snip]

We don't mean to sound impatient, but we've seen enough. The country is in the middle of the worst financial crisis in 75 years, and the second-most-important person in charge clearly isn't the right man for the job.

When both engines on US Air Flight 1549 quit after takeoff, Capt. Sullenberger did not cling stubbornly to his preconceived view of the situation. He did not float endless versions of the same bad plan to air traffic controllers to see what they thought of them. He did not spend months preparing for a moment just like this only to be seized by indecision when it arrived.

Instead, he just took the controls and landed the plane in the Hudson.

After detailing Geithner's "Timmy in the Well" exploits, Blodget continues;

With a few years of seasoning in a normal environment, Tim Geithner might turn out to be a fine Treasury Secretary. But this isn't a normal environment, and we don't have a few years.

The engines of the US economy just quit. We're losing altitude rapidly. And the co-pilot flying the plane clearly doesn't know what to do.

So it's time for the captain to take over again, before Geithner takes him and the rest of us down with him.

Megan McArdle comes, somewhat tepidly, to Geithner's defense ("Should Geithner go?"), however, we probably can predict, there will be more-and-more of these type of posts, articles and headlines coming in the days ahead.

Not to mention what the PartyofNoican will throw out there.

But, hey, it's March, and that means "March Madness", the time of year where anything can happen.

Anyone can win, or anyone can lose.

Hang in there Timmy, maybe you do have a buzzer-beater in you.