Wed Mar 18, 2009 at 08:59
I've never been a fan of Treasury Secretary Tim Geithner - he's a Rubinite who has been too close to Wall Street, and too focused on using government power to protect private shareholders. This is the guy who told the Senate that his primary goal in bailing out the financial industry with public money was not to protect the economy or taxpayers, but instead to use our taxpayer dollars to preserve "a financial system that is run by private shareholders [and] managed by private institutions." Despite my strong disagreements with his ideology, only today have I gotten to the point where I think it's clear he needs to be fired. Why? Because today he proved he's either lying to the public or totally incompetent.
Two stories explain why I say this.
Here's the first, showing us how Geithner insists he only found out about AIG's bonuses a week ago:
WASHINGTON (CNN) - A new timeline released by White House officials late Tuesday evening reveals the president first learned about the $165 million in AIG bonuses last Thursday...The new timeline was released after White House spokesman Robert Gibbs said he was unaware of when President Barack Obama first learned of the bonus controversy and reporters asked that the White House provide a timeline. It also shows that Treasury Secretary Timothy Geithner first found out about the bonuses from his staff last Tuesday.
Now here's the Associated Press, refuting this timeline:
For months, the Obama administration and members of Congress have known that insurance giant AIG was getting ready to pay huge bonuses while living off government bailouts. It wasn't until the money was flowing and news was trickling out to the public that official Washington rose up in anger and vowed to yank the money back...The situation has the White House and Treasury Secretary Timothy Geithner on the defensive. The administration was caught off guard Tuesday trying to explain why Geithner had waited until last Wednesday to call AIG chief executive Edward M. Liddy and demand that the bonus payments be restructured. Publicly, the White House expressed confidence in Geithner _ but still made it clear he was the one responsible for how the matter was handled.
For the willfully ignorant who would like to pretend that AP is cooking up this story, recall that AP's story isn't even really "news" in that it is merely corroborating what we already know and what has already been widely reported: the AIG bonus contracts being cited by the administration were signed in 2008, and as the 80 percent owner of AIG, the federal government (ie. the Treasury Department and the Obama administration) have had access to the company's books and contracts for many months. Indeed, even if you believe that only the Federal Reserve bank was told about the AIG bonus contracts, recall that Geithner was a top official at the Federal Reserve bank when the AIG bailout was crafted and when AIG was telling the Federal Reserve about its finances and obligations - and the Wall Street Journal reported that Geithner was intimately involved in the AIG bailout (meaning he had access to their books/contracts months ago).
That means either Geithner is lying to the public by pretending he never knew about the AIG bonuses when, in fact he did.* Or, he's egregiously uninformed/incompetent and therefore absolutely unfit to hold one of the most important economic offices in our country.
This comes on top of Geithner and Summers dishonestly insisting that they are unable to stop the AIG bonuses because of Sen. Chris Dodd's (D-CT) executive compensation legislation that exempted AIG-style bonuses from limits. In fact, as the Wall Street Journal and Hill newspaper long ago reported, Dodd's original bill would have limited such bonuses, but Geithner and Summers specifically forced him to water down his bill because it was "too aggressive." And yet somehow, Geithner and Summers would have us believe the weakening of that legislation - and thus the AIG bonuses - is Dodd's fault, not theirs.
When looked at in sum, what you see is a Treasury Secretary that is creating a huge economic credibility gap for the Obama administration. He is, in short, undermining Obama's presidency - and it's time for Geithner to go.
* Arguably even worse is the fact that Obama himself knew about the bonuses before the checks were cut, and did absolutely nothing to stop those checks from being cut - but that's fodder for another post altogether.
UPDATE: AP notes that in January 2009, "Reps. Joseph E. Crowley of New York and Paul E. Kanjorski of Pennsylvania wrote to the Federal Reserve and the Treasury Department pressing the administration to scrutinize AIG's bonus plans and take steps against excessive payments." So even if you believe Geithner didn't know about the bonuses from his previous work, he was specifically asked to do the work that would have revealed those planned bonuses as far back as January. He either obliged and did the due diligence that would have revealed the bonus contracts, or he ignored the request. That means, as I said earlier in this post, he's either lying about having just found out, or he's incompetent and didn't fulfill what should be the minimum amount of due diligence when a Treasury Secretary hands over billions to what is effectively a government-owned company.