The president has called for tougher laws on financial fraud. If President Obama intends to take action on these words, his first action should be to remove a major obstacle to banking reform and the eventual implementation of his will: Secretary Tim Geithner. It's certainly not everything he'll need to do, but it may be a necessary first hurdle.
In tonight's State of the Union address the president called for tougher laws on financial fraud. If President Obama intends to take action on these words, his first action should be to remove a major obstacle to banking reform and the eventual implementation of his will: Secretary Tim Geithner. It's certainly not everything he'll need to do, but it may be a necessary first hurdle.
Secretary of the Treasury Timothy Geithner by http://www.fedupusa.org/2011/05/tim-geithner-accused-of-forcing-ireland-into-bankruptcy/
Number 10: He's a tax cheat or tax dummy, take your pick. Tim Geithner shouldn't have been confirmed for the job of United States Secretary of the Treasury in the first place. He failed to declare $34,000 of income from when he was employed by the International Monetary Fund. Was he deliberately hiding income or was he ignorant of the fact that he had to declare that income? Either way, is this a man that should be considered to head the U.S. Department of Treasury and the Internal Revenue Service? He blamed his tax "mistake" on TurboTax.
Number 9: He's all for the 1%. He developed the strategy to stymie Elizabeth Warren. Kowtowing to his banker cronies Geithner neutralized any political power Warren had accumulated and gave Wall Street what it wanted: A guarantee that the defender of the public interest in matters of debt and credit would never get the job heading the Consumer Financial Protection Bureau.
Number 8: He doesn't like hearing any views critical of Wall Street and Big Banking. Notable example: In 2004, Geithner impulsively tossed Robert Shiller off the board of directors of the New York Federal Reserve. Why? Shiller had solid data that the jig was up; housing prices were inflated by an astounding 30 -- 50%. Back then Shiller was acclaimed for his groundbreaking work in behavioral economics. Shiller predicted the disastrous end of a growing series of market bubbles that begin in the 1980's. Such clear thinking people don't appeal Secretary Geithner.
Number 7: He's a liar and you can't believe a thing he says. Though Ben Bernanke got "the credit," it was Geithner who, in 2008, decided to start the market bailout with $30 billion federal backing for the sale of insolvent Bear Stearns to the JP Morgan, headed by Jamie Dimon. Geithner and Bernanke said this deal was necessary because of a once-in-a-lifetime emergency. Yes, they knew better, but con men have to lie or the entire scam goes down the drain. After this "one time" event all the other players started looking for taxpayer money in deals to take over troubled competitors. They all wanted a "Jamie Deal."
Unhealthy attraction? by Getty Images
Number 6: He's opposed to transparent markets or open exchanges for derivatives. If President Obama wants to continue to been seen as Wall Street's bosom buddy, Secretary Geithner should stick around. Geithner mistakenly said he wanted derivatives traded on an open market during his confirmation hearings. With a mandatory open market for these unsecured bets on bets on bets, Wall Street bucket shops would no longer be able to hide pricing information from buyers and sellers, which is why they make a killing on these products. After Tim's anti-Wall Street gaff was brought to his attention he demurred. No competitive markets for the Street.
Number 5: He neglected to tell the President the whole truth about the Wall Street party and protected outrageous compensation. Geithner knew well in advance about the $165 million in bonus to be paid to top AIG executive well after the firm's flagrant demise. Geithner met with the President many times prior to this bombshell that rocked the nation, but he never mentioned it. The President trusted Geithner, but again and again it appears this trust was misplaced. Further, it was Geithner who made the call to Senator Chris Dodd to make compensation packages contracted prior to TARP's passage a-okay.
(There's also a good case to be made that he knew about Goldman Sachs getting 100 cents on the dollar for bets placed with AIG from government bailout money, money that was supposed to be financing business loans. )
Number 4: Instead of fixing Wall Street he gave us a lost decade or more. Facing the problem of what was thought then to be a $2 trillion dollars hole in the banking system, Secretary Geithner decided to sweep it all under the carpet and let the mold grow thick. He looked to find another elaborate con to keep the party going, keep all the toxic assets hidden, and keep the economy stalled and credit unavailable. There would be no bank closures or dismantling. Geithner's answer: stress tests and zero interest cash loans which Wall Street sold back to the Government by purchasing Treasury notes and making a sure-thing 3% profit.
Number 3: He doesn't keep his word, not even to the President of the United States of America. In early 2008, the President and others on his economic team wanted to send a clear message to Wall Street by closing Citibank, which was by all measures insolvent. Instead, Secretary Geithner went rogue and ignored the decision. Was this the crucial inaction that sank all chances for President Obama? Could such a bold action have set things straight with the bankers? Corrected the dreadful economic course of the country? Have given new life to the Obama presidency and spare tens of millions of Americans from persistent financial hardship?
Number 2: He has never supported reforms to end the ongoing banking cartel. Even in 2009, when Paul Volcker shouted at the top of his lungs for reinstatement of Glass-Steagall like laws to end the major conflicts of interest in the "too-big-to-fail" banks, Secretary Geithner has never offered words supporting reform.
Geithner's Treasury Department was notoriously "slow and uneven" when it came to implementing White House economic policy, according to Pete Rouse, senior advisor to the President who studied the situation from inside the Obama Administration for more than a year.
For example, as the banking crisis dragged into 2010 one very rational suggestion for curtailing the Wall Street money games was made: ban commercial banks from "proprietary trading." Proprietary trading is a euphemism for high risk speculation done for the bank's benefit (or loss) alone, not on behalf of a client. Geithner initiated a long, complex discussion about implementing. Result: a version of the "Volker Rule," part of the Dodd--Frank Wall Street Reform and Consumer Protection Act , will soon be law, but please don't credit Secretary Geithner who watched while Wall Street shot the end product full of loopholes.
Number 1: Geithner is Obama's Svengali of inaction. Throughout the President's first term Tim Geithner has managed to maintain Wall Street's immoral, legal only in standing, status quo by telling the president to "first do no harm." The Treasury Secretary's soothing bromide has been a comfort to the president but it has also been a disservice as its logic is convoluted. Doing nothing is also a decision. The president needs to shuck this false console and understand it for what it is: the devious deception of a con man.
Chaz Valenza is writer and small business owner in New Jersey. He earned his MBA from New York University's Stern School of Business. His current feature film project is "Single Point Failure" an insider's account of how the Reagan Administration caused the greatest tragedy of the space age based on Richard C. Cook's book "Challenger Revealed." He is a former Director of Public Information for Planned Parenthood of NYC. His website is: www.WordsWillNever.com