Obama’s Geithner Problem
Any regular reader of Eschaton can tell you that the only way we can get out of this economic mudslide it to pre-privatize the banks. Normal economic activity can not return unless the bad asset ticking time bombs are all defused.
They could also tell you that Geithner is dedicated to bullshitting around the margins and pretending that the crap assets the banks are holding will be worth something if the US government throws enough money at the banks.
The upshot is that I find myself agreeing with Duncan Black that history will not judge Geithner or Obama kindly unless they get the balls to pull the trigger on pre-privatization.
Tags: Obama
I agree; people are not looking forward only backward. The banks have many billions of dollars of good assets that soaring unemployment and falling wages will turn into additioal toxic assets needing more and more bailout money. The only real advantage to the bailout is the stockholders and people at the top are being saved from losing money.
Huzzah!
Geithner has been a disappointment so far.
U.I. I agree, to much a part of the old guy network. Hard to find a cure when your part of the problem.
I love the term ‘pre-privatization’… I’ll bet that was tested with focus groups.
No use of the N-word allowed, huh (nationalization that is).
I wish they would spend half the time they have spent on semantics and catering to the banking lobby to actually explaining the situation to the public and laying out ground rues for taking over a bank holding company (which neither the FDIC or the Fed have an authority to do – only the depository institutions within the bank holding companies).
I was very optimistic that they would take the time after the election to make some bold moves. I don’t know why – Geithner was part of the problem in creating this monster.
I hope you all listened to the hour-long “This American Life” this week which explained the banking problem very well. Geithner is definitely of the banker’s view. I personally won’t have any trust in the system until we purge the people who messed it up in the first place. I’m not willing to give Obama much more time to fix things.
Sweden nationalized there 6 largest banks during the dot com meltdown in the 1990`s and reprivitised them later, although some people argue that we have many more banks than they did, 65% of the banking here is done by BofA, C JPM and wells fargo so the effect here might be positive as it was in Sweden.
The housing problem being settled by bankruptcy judges actually gives the homeowner a break. Of course the homes were overpriced, now we can have a case by case basis, hopefully working in favor of the homeowner. It will keep the homeowner in the home, and stop a lot of foreclosures.
The stimulus package is beginning to work…not for the banksters, because the public is aware of the wall street ponzi scheme. We need to nationalize the bad banks and give bailouts to the ones who played by the rules.
Geithner is a Wall Street Ponzi scheme protector, Obama would do well to get rid of that guy and hire a Steiglitz or a Krugman.
Liz; good choices but Krugman has already turned down the job on his web site. Have not heard anything pro or con from Steiglitz.
Stiglitz had said earlier that he had not been contacted. The only member of the economic team that I have any confidence in is Volker.
Volker is one of the ones responsible….no one should have that seat who has had any position with the World Bank, or Federal Reserve. We need someone who is not connected to any of these banksters….Stieglitz and Krugman are more honest because they are economics professors…able to speak the truth, and see the problems from outside Wall Street.
Pre-privatize is a word that came from the writer of the Calculated Risk blog.
But the government is already creeping up on privatizing some of these banks. What else would you call getting a 35% equity stake (and a damned bad deal BTW) in Citi AND telling the world that Vikram Pandit can stay? And AIG — I think that we’ve put more into it at this point that it is worth and all of that money is apparently letting derivative counterparties get out. Then who holds the bag?
The entire approach from TARP on was to make sure that the bank management, shareholders and bond holders were not forced to lose their shirts. Which, of course, is exactly what should have happened. Now the new Geithner scheme is to backstop all of the cash sitting on the sidelines to get them back into the market buying assets and other instruments. Again with no upside for taxpayers.
I wouldn’t mind so much about all of this backstopping and bailing out if these guys were making deals that might provide taxpayers some upside if it all works. Frankly, if I could suggest a solution, it would be to take the rest of the TARP money, hand it to Warren Buffett and tell him to fix what he can and make sure taxpayers get the most aggressive return out of it.
But something has to happen. And has to happen now.
I’m tired of them trying to help regular Americans indirectly by shoving money into banks. Why don’t we use that money to directly help Americans?
We definitely need a functional banking system — but not at any cost which looks like the Geithner motto. They should spend the money on receivership activities and perhaps help healthier banks buy the functional bits of the dead banks.
For Immediate Release:Contact: Elliott
Jacobson
(302) 674-7303
(302) 233-5637 cell
MICHAEL GOULD
(302) 674 7305
STEWART ACHIEVES IMMEDIATE RELIEF FOR DELAWARE EMPLOYERS
Stewart Secures Implementation of Former Commissioner Matt Denn’s Order of Workers’ Compensation Rate Reductions of 11.13% (voluntary) and 9.74% (residual) Effective December 1, 2008 Saving Businesses Tens of Millions of Dollars
Dover – March 5, 2009 – Delaware Insurance Commissioner Karen Weldin Stewart announced today that the Delaware Compensation Rating Bureau, Inc. (DCRB) has filed and she has approved a partially amended rate filing imposing workers compensation rate reductions ordered by former Commissioner Matt Denn from his December 30, 2008 Order and Decision. This filing provides for a retroactive cut of 9.74% (in the residual market) and 11.13 % (in the voluntary market} effective December 1, 2008. Commissioner Stewart said, “We are pleased that Delaware’s employers will begin to see tens of millions of dollars in savings of workers’ compensation premiums while Delaware’s policyholders can enjoy relief relative to medical fee schedules for worker’s compensation injuries during these challenging economic times”
Commissioner Stewart continues to aggressively litigate the enforcement of the remainder of former Commissioner Denn’s November and December Orders both of which the DCRB has objected to and appealed in the Court of Chancery and the Superior Court. Commissioner Denn’s Orders determined that Delaware employers were being overcharged for workers’ compensation coverage because the rates currently in effect failed to properly account for certain cost containment measures required by Senate Bill 1 of the 144th Delaware General Assembly. The DCRB continues to appeal the rating discounts in the Orders – additional rate reductions totaling 6% of 2008 premium value in the current year and each of the succeeding two years and then 5% in year four.
Commissioner Stewart concluded, “Our efforts to do our part in meeting the financial and economic challenges faced by our state and nation will continue on several fronts. My administration is committed to insuring that businesses have the resources to grow and prosper, that policyholders are free from onerous premiums and that our insurance industry expands and remains healthy and solvent.”
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