Replace Timothy Geithner Before He Does More Damage
The Treasury secretary's performance has sunk underneath the very low expectations of him.
Two months ago, I gave a thumbs down to Obama’s entire economic team, including the then-nominee for secretary of the Treasury, Timothy Geithner. Now, I am sorry to say that Geithner is even performing worse than my very low expectations of him. The country gave him a free pass on his confirmation despite his tax problems, because he had been previously involved in the rescue of the financial system as president of the Federal Reserve of New York. We thought that would allow him to have a running start on solving this crisis, but instead it seems to have hobbled him.
It is only a matter of time before he is replaced. The names of his potential replacements are already on commentators’ lips. Obama is in the middle of his Hurricane Katrina, and Geithner has become as much a liability to him as Michael “Brownie” Brown, former head of FEMA, became to George Bush.
In ordinary times, we might be able to wait for him to grow into the job, but these are not ordinary times. This is probably the most challenging period in the last century to be the Treasury secretary. The global financial system is at the edge of a cliff and is barely hanging on by its fingertips. Even Odgen Mills, the secretary of the Treasury during the Great Depression, probably did not have it as challenging as the current office holder. During the Great Depression, they did not have to contend with complex financial instruments, massive amounts of leverage, and the international nature of the current economic crisis.
With the unprecedented good will that Obama had at the start of his administration, Geithner, if he had prepared a plan, could have immediately nationalized the insurance giant AIG and Citigroup. Essentially, AIG is already nationalized because the American taxpayer owns 80% of the company and has given AIG $170 billion and counting. If it had been private, the government would have had an easier time stepping in and preventing the AIG bonus controversy.
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Laura Goldman worked on Wall Street for 25 years for such firms as Merrill Lynch and Paine Webber. She now owns her own money management firm, LSG capital, in Tel Aviv, Israel.
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41 Comments
1. David Thomson:Replacing Timothy Geithner will accomplish little. No human being can adequately carry out his duties. It is impossible—even if the individual possesses an IQ of 600 and is the smartest person ever to walk on this planet. Milton Friedman, Friedrich Hayek, and Ludwig Von Mises brilliantly explained in their insightful works that governments are inherently unable to even begin micromanaging the economic affairs of its citizens. That is why the only way to truly stimulate the economy is to lower taxes on individuals and corporations and severely cut back on government spending. The citizenry must put a stop to Barack Obama’s naïve polices which place so much unwarranted trust in bureaucrats and power hungry politicians.
Mar 24, 2009 - 2:18 am 2. arhooley:What “miscreants” are you referring to, Laura? People who were hired to wind down an obsolescing outfit and were offered contracts to stick it out, since they were being asked to take jobs with no future? Or the ones who did the offering?
Of course Geithner’s double-talk on what he knew when is another matter, but I wish the PMers could get lucid over those retention bonuses.
Mar 24, 2009 - 2:25 am 3. vivo:If you want to understand the messy financial situation of the USA (and the World), and have the patience to read it, open the following link. I guarantee that it will SHOCK you.
http://www.rollingstone.com/politics/story/26793903/the_big_takeover
I predict that in six months (or less) the name of Joseph Cassano (from AIG) will be a household name (along with Bernie Madoff, Mike Milken, Enron, et al)
Mar 24, 2009 - 3:56 am 4. Craig:But…but…but Tim Geithner is ‘brilliant’! But..but..
but…he’s so smart! He’s suppose to be ‘the man’.
Yah right. He couldn’t guess the number of cards in a game of 3-card Monte.
Mar 24, 2009 - 4:21 am 5. Old Soldier:Geithner will fail because he works for Obama, just like anyone else would.
I agree with the need for better, not more regulatory oversight. More unenforced rules will accomplish nothing. We are already at the point where the average business manager has no idea what rules he is supposed to be complying with.
“Wall Street could soon be located in London, Singapore, or Hong Kong. Is that what we really want?” Change the “could” to “will.” Wall Street is done. Federal, state and city taxes, regulations like SOX, government interference, and the coming weak dollar have destroyed the American financial industry.
As for the complaints about executive compensation – I tire of the author’s working class drivel. I thoroughly reject the idea that any private citizen’s compensation is the government’s or public’s business.
Mar 24, 2009 - 4:37 am 6. nosinin:Agree old soldier. To play the devils advocate. Why does Geithner have no one working with him? Obama is obviously aware of that as he stated on 60 minutes. Right before he broke into maniacal laughter.
I fear there is a method to that madness. Today I read on MSNBC that the WH will ask for power to “seize” institutions that they feel could effect the economy and take them over, they along with the Fed Rsv. The definition of institution is not clearly defined.
I too believe that Wall Street is done. We are on our way to global currency with China leading that charge. End of life as we know it.
Mar 24, 2009 - 5:09 am 7. JD:The Treasury Sec. is so awful that President Obama looks entirely competent by comparison.
Tim Giethner sure has the Midas touch:
http://trackacrat.com/category/timothy-geithner/
Mar 24, 2009 - 5:17 am 8. Terry Gain:David Thomson is first with his comment and economic insight.
Geithner is simply carrying out his boss’s program. Despite the fact that America’s vast wealth was created through individual initiative Geithner’s boss believes that the government should drive economic development.
Geithner’s boss is on track to more than double the accumulated debt in five years. The magnitude of this insanity has not yet sunk in. Over the next five years Barack Obama will cause the United States to incur more debt than all of the other presidents, including the hated Dubya, combined.
The damage has been done and it makes not the slightest difference who occupies the position of Treasury Secretary.
The American people elected an oxymoron: a brilliant socialist.
Mar 24, 2009 - 5:41 am 9. elvis:IT DOESN’T MATTER IF GEITHNER IS IN OR NOT.
Mar 24, 2009 - 5:47 am 10. Snoop-Diggity-DANG-Dawg:As the Washington Times says today: “The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.” They will continue to TAKE as long as they can with whoever is in that position!
“I guarantee that it will SHOCK you.”
Yeah, where were you six months ago, Rolling Stone? Doing bong hits at Starbucks? But now you’re all geniuses because you recognize the shithole we now live in.
Mar 24, 2009 - 5:48 am 11. Harry:If the markets are any indication then Geithner’s plan is on good footing. Dow Jones has risen several hundred points. Oil is over $53 a bbl (but that could be just seasonal rises).
Mar 24, 2009 - 6:11 am 12. Joe:Has anybody addressed what happens when these companies begin making a profit again? What used to be taxes are going to be loan paybacks. How does that affect future budgets? Will that money be spent on the annual budget or will it go in some vault for posterity?
Geithner, his boss and all their cronies need to go. Hopefully, the midterm election will make a difference. We are being ruined day by day by incompetents and socialists, and the head of the group is a celeb president who,apparently, just loves being on tv. Wish he had gone into acting instead of politics, although there is a close connection.
Mar 24, 2009 - 6:19 am 13. cedarhill:Obama and Geithner seem to be following the great mathematician and socialist philosopher Bertrand Russell “There is order, even in Chaos”.
Only problem now is deciding what level of Chaos Obama is playing today.
Mar 24, 2009 - 6:37 am 14. sydneyj:Why would he get rid of Geither? He’s got the perfect fall guy if anything goes wrong. Plus, after he built up the guy so highly, saying he’s the only one who could fix the mess we’re in, it would be embarrassing for Obama to have to let him go…and we know Obama hates to be embarrassed.
Mar 24, 2009 - 6:56 am 15. rosie:It doesn’t matter who the Treasury Secretary is – Treasury is being run by the White House. Hence, no need for any staff for the Treasury Secretary. Obama would be hard pressed to find anyone with the same lack of integrity as Geithner who would be willing to be the front man for this administration.
Mar 24, 2009 - 7:53 am 16. Geofizz:Waytago Vivo #3. I don’t usually agree with you, but your link is indeed a MUST READ.
Geithner is just a Wall Street stooge. As are the Fed and the Treasury — largely staffed by Wall Street insiders who’s loyalties are with Wall Street. Google and read stuff from William Black, who was involved in investigating the Savings and Loan mess (and was replaced by more bank-friendly laywers). And read Yves Smith’s blog Naked Capitalism to get a real picture of how Wall Street operates.
Here’s what I am wondering… The Fed, Treasury and powers that be in Wall Street all want to keep throwing money to keep insolvent banks afloat while they use Taxpayer dollars to continue realizing their profits. I wonder if they made a deal with Obama?? Something like “You can focus on your Social Engineering (healthcare, energy independency, cradle to job education…) as long as you leave Wall Street alone and let us carry on the way we want to.” William Black wrote that these bailouts all have a provision where those banks that participate in them are exempt from government regulation. Read this:
http://firedoglake.com/2009/03/23/talking-economic-accountability-with-william-black/
This whole financial crisis is about a corrupt and fraudulent Wall Street that is in bed with a corrupt government — with both Republicans and Democrats. Both parties receive gobs of money from Wall Street; they are paid to look the other way (or even to help Wall Street). Every once in a while the government will express outrage and do something to make it look like they’re there to represent the Little People. None of these folks give a Rat’s Hiney about the American that exists outside of Washington D.C. and New York City. While Wall Street makes insane profits, our own wealth is being DESTROYED.
Mar 24, 2009 - 8:24 am 17. Geofizz:Clarification w/ my previous post, where I stated “William Black wrote that these bailouts all have a provision where those banks that participate in them are exempt from government regulation.” That’s not quite right (I was winging it from memory…) Here’s Black’s actual quote, from the firedoglake link article above:
“The key, unreported, news from Geithner re: compensation is that. by joining this program, hedge funds, etc., can also secure immunity from future statutory reforms dealing with comp. and governance.”
Not sure which program… TALF? Public Private Partnership just rolled out yesterday?
Mar 24, 2009 - 8:42 am 18. deguello:Keep him;the worse he is, the worse things are, the better for the 2010 elections!
Mar 24, 2009 - 9:12 am 19. deguello:IT IS OBAMA WHO SHOULD GO;GEITHNER’S JUST HIS ERRAND BOY!
Mar 24, 2009 - 9:14 am 20. JED:How come when I study these treasury proposals I have to compare and contrast the American system to the Venezuelian system? Was Hugo right when he said that we are entering a new century of socialism?
Mar 24, 2009 - 9:25 am 21. tanstaafl:Contrary to the thesis of the rollingstone piece, this whole (current) financial crisis is about an incompetent President using his position to enhance that crisis and use the resulting fear to advance a socialist agenda.
Caught between a rock and a hard place, we can’t seem to decide whether Geithner and understaffed Treasury (Timothy and 40 brain dead civil servants) should be fired for incompetence or should be granted unprecedented powers of control over the private sector. Obama seems very disinterested in the obvious, stated yesterday by Mark Steyn…
“It’s just not possible for civil servants to realign and stimulate the world economy and make it all start functioning again.”
Mar 24, 2009 - 9:30 am 22. Paul -Indiana:From 19. In addition, Obama’s puppet master should also go. He’s the one who scripts Obama’s ‘great’ speeches. Without the teleprompter, Obama is a stammering fool, not just a fool.
Mar 24, 2009 - 11:02 am 23. Christine:Allowing Geithner to remain in his position is as bad as asking Claus von Bulow to be caretaker to your sick, wealthy mother!
The WHOLE of the Obama administration, President included, is deplorable.
Obama has not the qualifications, nor the patriotism or the legal status to BE president and relies upon a hand-picked network of crooks, cheats, liars and just plain THIEVES to do his bidding!
If America sits back and lets these succybuses continue to destroy us, we only have ourselves to blame! HOW MUCH MORE PROOF DO YOU NEED THAT THEY ALL MUST GO?
Mar 24, 2009 - 11:41 am 24. wancow:When illegals and foreigners (who are living here scot free at taxpayer expense, while WE are out of jobs, out of our homes and STARVING),have more rights than the people PAYING THEIR FREAKING BILLS, IT’S TIME TO TAKE ACTION!
I hope to GOD Obama keeps Turbo Tax Tim on! It’s like watching a train wreck in slow motion! Keep that popcorn coming!
Mar 24, 2009 - 11:48 am 25. Laura Goldman:#2 Arhooley – I am talking about both the people who pay them to people who are underserving and the people who think that they are entitled to them for cleaning up the mess that they made.
Like your bog.
Mar 24, 2009 - 12:04 pm 26. donttreadonme:I sense another moderate-fiscal-conservative-socially-liberal Obama apologist disguised in another of an endless list of “Blame Timmy” op-eds.
Mar 24, 2009 - 12:14 pm 27. donttreadonme:The boss rides you;so you go home and kick the dog. Yes, Timmy IS Doogy Howser. Obama, unfortunately, IS Erkle. Laura, see that goofy teleprompter-reading stuttering idiot? You know, the brown-skinned fellow with that smell-the-fart look on his face? Standing by Timmy? That’s where the blame lies, sweetheart.
22.Paul,
Mar 24, 2009 - 12:20 pm 28. RabelRabel:I totally agree. I demand that Congress begin impeachment proceedings against that damn teleprompter (or at least its hard drive).
arhooley said: “What “miscreants” are you referring to, Laura? People who were hired to wind down an obsolescing outfit and were offered contracts to stick it out, since they were being asked to take jobs with no future? Or the ones who did the offering?”
I could be more lucid about the bonuses if this claim that all of the “bad guys” were long gone before the bonuses were offered could be substantiated. I haven’t seen anything other than vague assertions by people with a vested interest. If you can offer evidence I’d be glad to see it. So far we don’t even know who exactly was responsible for offering and approving the retention bonus contracts. I’ll continue to view it as hush money until details become available that prove otherwise.
Mar 24, 2009 - 12:31 pm 29. katablog:With the idea floated today to allow the Secretary of the Treasury to take over any business if deemed to jeopardize the economy (at the say so of the Sec. no less), change their business model, change contracts they’ve signed, etc. – who cares who is Secretary of the Treasury?
Don’t you get it folks? O is out to completely control every single business in the USA. Hugo Chavez has had a bit more finesse as he has socialized his country, and taken a lot more time to do so.
It’s the TOTUS that needs to go.
Mar 24, 2009 - 12:41 pm 30. Laura:I am waiting for you guys to take to the streets and start demanding BHO’s impeachment. Please, please hurry……
Mar 24, 2009 - 12:41 pm 31. seven:Obama runs the treasury and the conflict written on Geithner’s face is that he is told to do and say things he doesn’t agree with. Obama is implementing a power grab. He can do the power grab in healthcare even tho he has no HHS secretary. It doesn’t matter what the HHS would have for an opinion. I suspect he discussed AIG bonuses even starting before the election. Obama is doing his power grab in energy and had the EPA cancel mining permists today.
Mar 24, 2009 - 12:44 pm 32. Trevor:The reason he wants to have authority to snage insolvent companies is then he has control instead of a trusttee or a Judge. Obama is drooling over at least 2 large banks and GM.
I think Rahm is the bulldog and he is keeping low.
The parallel to Katrina is nice. Obama was praising Geithner on 60 Minutes a couple days ago. Too bad he didn’t use the same doomed words as Bush, “doing a heck of a job”.
There should be more articles speculating on what the Bank World might look like after they solve this “too big to fail” problem. I’d like to see AIG’s insurance unit (AIU?) survive, but the rest of AIG, BofA, and Citi totally obliterated. Geithner has other plans which seem to make this sad mess eternal.
> Now, I am sorry to say that Geithner is even performing worse
Mar 24, 2009 - 12:51 pm 33. Marc Malone:> than my very low expectations of him.
Poorly written drivel. Btw, it is “dissembling”, not “disassembling”. Try not to use words that are too big for you.
Mar 24, 2009 - 12:51 pm 34. wancow:“30. Laura: I am waiting for you guys to take to the streets and start demanding BHO’s impeachment. Please, please hurry……”
LMAO! No, Laura, we aren’t that stupid. What we are waiting for is for you Liberal Fascists to demand his resignation, or, failing that, his impeachment. This man is an anchor around your necks, and if you’re not smart enough to realize it, I’m terribly sorry…
no, I lied, I’m not even a little sorry!
Mar 24, 2009 - 1:15 pm 35. Pee Wee Herman, Community Organizer:You don’t seem to realize that you’re dealing with a RAID array, and you need to remove more than just one hard drive.
Mar 24, 2009 - 4:53 pm 36. tanstaafl:A Special Message from Barack Obama’s Teleprompter
Mar 24, 2009 - 7:27 pm 37. vivo:What would McCain do?
Mar 25, 2009 - 6:04 am 38. donttreadonme:37.Vivo
Mar 25, 2009 - 7:00 am 39. Peter the Bubblehead:McCain would get all red-faced and “Dr.Evil-like,” and demand accountability! And he would NOT use a teleprompter.
In response to viv @ #37;
Mar 25, 2009 - 9:28 am 40. wancow:A damn-sight better job then the Teleprompter-in-Chief has been doing, I would wager to bet.
39. Peter the Bubblehead, I kinda doubt that… he’d probably strap on his kneepads and crawl across the isle to give a lewinsky to whichever democrat represents the Hackers of America union…
Mar 25, 2009 - 11:29 am 41. seven:Part of Geithners problem is the bad supervision from Mr barry. Obama is the most ignorant of minds Tim has been around. He is doing what he is told. That is part of the frustration. Some statements he makes he knows better.
Mar 26, 2009 - 12:16 pm