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Timothy Geithner Says Justice Is Nice but Banks Are Just the Best

10:34 am in Financial Crisis by masaccio

The Secretary of the Treasury discusses the rule of law

The soon-to-depart Treasury Secretary Timothy Geithner confirmed to Liaquat Ahamed of The National Review that his goal was to protect bankers:

… My own view was that it was going to be very hard, if not impossible to design a financial rescue that was going to be effective in protecting all the innocent victims hit by the crisis and still satisfy the completely understandable public desire for justice and accountability. Those things were in direct and tragic tension, never resolvable at that time.

I always felt that the only preoccupation for people in policy at the time should be to fix the problem as quickly as we could, as effectively as we could, and only after that would other things be possible, including how to figure out not just how to clean up the mess, but reform the financial system.

That’s just silly. There is no tension between protecting the innocent victims and locking up the criminals who caused the Great Crash. None. And his claim that he wanted to do anything for the “innocent victims” is laughable. The truth is what he told Elizabeth Warren and Neil Barofsky: he wanted to foam the runway with the financial corpses of the victims of mortgage and foreclosure fraud so that the banksters and the feral rich would have a soft landing. Geithner thinks us professional leftists who are outraged by the failure to prosecute banks and their criminal employees are short-sighted, if not stupid:

…I think that what really distinguishes countries in crisis are those that are lucky enough to have political leaders who are willing to take the brutal political cost of doing what’s necessary and those countries that waited and let the populist fires burn, or decided they were going to try to teach people a lesson and put populism ahead of other things.

So, it’s fine with him that there were no criminal prosecutions. The only relevant issue was the entire economy, and Geithner thinks he did great there:

I’m biased but I felt that in the basic strategy that the President embraced and that we put into effect, we did something that was incredibly effective for the broad interest of the economy and the financial system.

The results of that effectiveness are obvious, even if Geithner can’t grasp them. Unemployment is outrageously high. The middle class has been crushed by stagnant wages and huge losses in personal wealth, especially home equity. The poor are on the chopping block, with state after state trying to cut the meager assistance they provide and the President bent on cutting Social Security, Medicaid and Medicare. Retirees see their savings dwindle under years of zero to negative real interest rates. The megabanks are bigger and more dangerous than ever.

That “broad interest of the economy” Geithner talks about is to insure that the feral rich pay no price, and are rewarded with ever-increasing personal wealth and income. Geithener and Lanny Breuer are joined at the hip in carrying out the Obama program of wealth protection at any cost, including the rule of law. Read the rest of this entry →

Congressmen and Banksters Protect Despots, Drug Lords and Tax Evaders

5:44 pm in Uncategorized by masaccio

Really, Congressman Posey? Really?

Congressmen Bill Posey (R-FL), Mario Diaz-Balart (R-FL), and Gregory Meeks (D-NY) have introduced a bill to bar the Treasury Department from adopting rules requiring US Banks to report interest paid on deposits by non-resident aliens to their native countries. This shocking bill reinforces the message of Nicholas Shaxson’s book, Treasure Islands, that the US is one of the biggest tax havens in the world.


Posey put out a press release explaining his rationale for this astonishing legislation:

“If you’re an investor from a country with massive human rights violations or a corrupt regime, chances are you want your personal bank account information held in confidence,” said Representative Bill Posey, a member of the House Financial Services Committee. “By imposing this new reporting requirement, those depositors will think twice about where they invest their money and cause many to invest elsewhere at a cost of billions of dollars to our economy. This is the wrong time to encourage individuals to withdraw billions from U.S. banks.”

In a possibly related move, the Independent Community Bankers Association wrote to Treasury Secretary Geithner violently opposing regulations that require notice to other nations under US tax treaties and other safeguards. The ICBA claims that there are $4 trillion on deposit from non-resident aliens, which may explain why other nations might be interested in knowing where their despots and drug lords and tax evaders keep their money.

The US has been working hard to get other nations to disclose the foreign holdings of US nationals. For example, it forced the giant Swiss bank, UBS, to pay a huge fine and disclose the names of thousands of US tax cheats.

The key to an effective program for catching tax cheats is reciprocity. If we refuse to work with other nations, why would they work with us? This is the kind of law that will harm those efforts. Apparently Posey, Diaz-Balart and Meeks don’t care whether the US is able to continue to enforce tax laws against cheats.

Is there any piece of legislation that could embarrass our elected representatives?

That Foot On Your Neck

12:48 pm in Economy, Financial Crisis by masaccio

Most of the time, you can ignore that foot on your neck. You can pretend that electoral politics work and that we are a nation of law, not of rich people. You can revel when your tribe puts someone in office, and pretend that the person you voted for is working in your interests.

Not today. Today it is confirmed: there will be no prosecutions, there will be no accountability for the rich financiers and their clients who caused the Great Crash of 2008, profited mightily, fought off regulation, and escaped with their personal fortunes and their reputations intact, all as part of the great muddle-through plan of the Obama administration.

Gretchen Morgenson and Louise Story report in the New York Times that in mid-October, 2008, in the middle of the collapse, Timothy Geithner met with Andrew Cuomo:

According to three people briefed at the time about the meeting, Mr. Geithner expressed concern about the fragility of the financial system.

His worry, according to these people, sprang from a desire to calm markets, a goal that could be complicated by a hard-charging attorney general.

At the time, Geithner was President of the Federal Reserve Bank of New York, and Cuomo was the Attorney General of New York. Cuomo ran noisy investigations but did not prosecute anyone. Now Geithner is Treasury Secretary and Cuomo is Governor of New York. Both of them have been rewarded for their attention to the needs and concerns of the financial markets.

Morgenson and Story report that the efforts of the FBI to ramp up to investigate the fraud and abuse were crushed by the Department of Justice, then headed by Michael Mukasey, shades of Alberto Gonzalez, can’t remember requests to beef up that operation. They report an unpublished policy of the SEC adopted in 2009 calling for caution in issuing hefty fines against banks that had gotten huge bailouts. I wonder how grateful the banks and their rich shareholders are for that thoughtfulness?

Could someone ask what kind of instructions Geithner and his current boss, President Obama, gave to the US Attorneys in the Southern District of New York, Los Angeles, Seattle and other big cities. They have done nothing at all, except, of course, for Preet Bharara’s silly and irrelevant insider trading cases.There is nothing to suggest that Jenny Durkan, the US Attorney in Seattle, (home of Washington Mutual), André Birotte, the US Attorney in Los Angeles (home of Countrywide, Long Beach Mortgage and New Century) and the rest of the Department of Justice even bothered with subpoenas.

Morgenson and Story are careful to add the usual banker explanation that these are complex cases. These cases are not complicated at all, and the information necessary to prove them has been gathered by the Financial Crisis Inquiry Commission and by Senators Levin and Coburn from the Senate Permanent Subcommittee on Investigations with further information.

That foot on your neck is banksters rubbing your face in their immunity from the rule of law.

Who Can Obama Nominate To Head Up the Consumer Financial Protection Bureau?

9:00 am in Uncategorized by masaccio

Treasury Secretary Geithner doesn’t want Elizabeth Warren to head up the Consumer Financial Protection Bureau, created by the new financial reforms. As Shahien Nasiripour points out in the Huffington Post, Warren has called out Geithner on a number of issues, not least of which is the failure of Treasury to lead on the foreclosure problem.

President Obama can’t handle internal controversy, and what a battle it would be. On one side, the money boyz, Larry Summers (women are genetically unsuited for math), Geithner (Sheila Bair and Mary Schapiro are too serious about their jobs and not sufficiently impressed with the political skillz of the money boyz). On the other side, yet another woman more qualified by temperament, brains, determination, knowledge and skill than the money boyz. Geithner couldn’t bear having Warren describe his fetish for giant banks, the only people who might hire him after he exits the revolving door.

We know how that "battle" comes out: just look at Dawn Johnson. That means that Warren, who created the idea and has been its strongest proponent, is out as possible leader.

So, who can the President appoint who would be acceptable to the money boyz, and the administration’s buddies and potential massive contributors at the Business Roundtable? Herewith a list of possibles.

Read the rest of this entry →