Tag: Secretary Of Treasury

AIG Is Only The Tip Of The Iceberg

The president has told us of his anger at the bonuses being paid to AIG employees, but I am starting to doubt the sincerity of his words.

Lawrence Summers, director of the White House National Economic Council, declared in a CBS television interview, “The easy thing would be to just say, you know, ‘Off with their heads,’ and violate the contracts. But you have to think about the consequences of breaking contracts for the overall system of law.”

With this turn of phrase invoking the guillotine, Summers inadvertently put his finger on an essential element of the AIG bonuses furor. Like the nobility at the time of the French Revolution, America’s ruling financial oligarchy is an entirely parasitic social layer, whose relentless defense of its wealth and privileges stands as the basic impediment to meeting the most basic needs of society as a whole.

In reality, the AIG bonuses are hardly an aberration. Citigroup’s CEO Vikram Pandit hauled in $10.82 million of compensation in 2008, Reuters reported Monday. This payout came as the bank received a $45 billion capital injection from the US government.

Bank of America Corp. CEO Kenneth Lewis fared only slightly worse, getting $9.96 million as his bank also received $45 billion in bailout funds.

Moreover, these obscene pay packages and bonuses are only a small part of the money handed out to the financial elite.

Should Geithner Go?

I have heard this on several occasions on the various news casts.  I have heard that he has NO idea what he is doing or that he has NO communication skills or that he does not instill confidence in the markets.  All in all pretty negative attitudes on the Secretary of Treasury.  I have also heard that Larry Summers would be a much better Treasury Secretary than Geithner.

We have heard all the BS on the handling of the economy.  All the pros and mostly cons….but are they handling it properly?

American officials like Larry Summers — now President Barack Obama’s economic guru — urged the Japanese to give up on failed institutions. Instead, Japan pumped 12 percent of its gross domestic product into saving the banks and got a “lost decade” of economic stagnation in return. Economic analysts across the board agree that the Japanese example must not be repeated, even as our lawmakers stumble into repeating it.

But yet, these “knowledgeable” economiosts are doing basically the same things that was done by the Japanese in the 90’s and we are to believe that it will have a different outcome this time because we are Americans and we do not make mistakes.

That is just all so much BS.

As it stands now, the U.S. government is keeping alive banks that would otherwise go bust at the same time it is hectoring them about lending more money — in other words, Japan redux. “Many banks continued to extend credit to insolvent borrowers, gambling that these firms would recover or that the government would bail them out,” wrote University of Chicago economist Anil K. Kashyap of Japan in the 1990s. “The Japanese government also encouraged banks to increase their lending to small and medium-sized firms to ease the credit crunch after 1998.”

The resulting misallocation of capital smothered growth. Tokyo short-circuited the natural churning of the capitalist system that is the only way to clear out failed companies and unproductive uses of capital. If the U.S. government keeps alive Chrysler and General Motors or Citigroup and Bank of America when they are no longer viable — and have rendered themselves such through poor business choices and foolish risk-taking — it will create a zombie economy without the capacity for self-renewal.

There is the problem in a nutshell….we are creating a “zombie” economy without the capacity for self-renewal.

IMO, then yes, Geithner and Summers should both go, getting back to the original question, neither of these guys learned nothing from the problems that the Japanese created from themselves and now they are creating the same circumstances in the US.  May I suggest that fresh blood is needed in Washington…people who understand the problem and have solutions, whether popular or not, as long as they repair the ailing economy.

It Is Good To Be A Bank

Treasury Secretary Tim Geithner defended his financial stabilization plan Tuesday, telling senators it is “fundamentally different” than the one pursued by his predecessor, Henry Paulson.  (sounds like the same thing to me)

Testifying before the Senate Banking Committee, Geithner conceded that the plan he outlined Tuesday morning lacked some details, including how much it might cost and how much additional funding might be necessary beyond what’s available under previous congressional authorizations.

Treasury Secretary Timothy Geithner pledged government financing for as much as $2 trillion of efforts to spur new lending and address banks’ toxic assets, seeking to end the credit crunch hobbling the economy.

The main components of the Treasury’s package today are a joint public- and private-sector fund to buy as much as $1 trillion of illiquid assets and a $1 trillion program to supply new credit to consumers and businesses. The administration also will inject additional taxpayer funds into banks, imposing tighter restrictions that will include limits on dividend payments, acquisitions and executive pay.

“I want to be candid: this strategy will cost money, involve risk, and take time,” Geithner said today.

Under today’s plan, regulators will subject banks to new tests to determine whether they have enough capital. The Treasury, Fed and other supervisors in the President’s Working Group on financial markets will develop guidelines for the examinations, which are aimed at ensuring that the country’s largest banks can withstand a worsening economy.

Banks that don’t have sufficient capital will be given additional taxpayer funds in the form of convertible preferred securities. Participants will have their dividends and political lobbying efforts restricted, along with limits on stock buybacks, acquisitions, executive compensation and so-called golden parachutes. Luxury spending provisions must also be disclosed.

Today’s package includes $50 billion for measures to stem mortgage foreclosures. Banks receiving federal funds will be required to participate in efforts to mitigate foreclosures. The Treasury and Fed will work to reduce monthly payments and establish loan-modification guidelines.

Still sounds like the same plan with a bit of tweeking to appear more sympathetic to the middle class.  Just once I would like to hear a plan coming out of Wall Street…..so far they have not said anything to address the problem they created.  A thank you would be a good start.

Treasury Speaks…..And?…..Nothing!

Say guys I hate to tell you that “I told you so”…well that is lie…I really enjoy being right…Life is good.

Go to search and check out what I have been saying about Geithner….I had serious doubts about his leadership of the economy and yesterday’s announcement just confirmed that …He Is Not The Person To Lead Treasury”!

His announcement did not lay out plans for the economy…he talked in circles…and most of all he just looked like a deer in the headlights.  All his talking sounded like a continuation of the Bush policies of helping Wall Street and ignoring what the problems really are.  He talked and said nothing…no plans..no schemes…nothing!  The markets bombed to 380 points down while he was speaking…that should tell you that he had nothing to say that would give investors confidence.

Doubt what I say?  Then go check out what I have been saying…he is the wrong person at the wrong time.

A bailout by any other name….

Still smells like crap!

We all have heard of the Toxic Asset Relief Plan (TARP)….right?…well since it has gotten such terrible press that the Sec of Treasury has decided to rename it to TALF, Term Asset-backed Loan Facility and then there was another change…the Financial “something”.

Does the name change really change anything else about the bailout?  Nope!  It is still BS for Wall Street and very little for where the problem is….Main Street.  It is kinda like renaming a jungle to a rain forest…it changes nothing…only gives it a kinder, more serene sounding title.  IT CHANGES NOTHING!

All his vagueness has shown one thing….banks get cash..people get screwed!

New Plan For Banks

After weeks of internal debate, the Obama administration has settled on a plan to inject billions of dollars in fresh capital into banks and entice investors to purchase their most troubled assets.

The new financial industry rescue plan, to be outlined in broad terms on Monday in a speech by the Treasury secretary, Timothy F. Geithner, will not require banks to increase their lending. That is despite criticism that institutions that already received money from the Troubled Asset Relief Program, or TARP, either hoarded it or used the funds to acquire other banks.

The incentives to investors could be in the form of commitments to absorb some of the losses from any assets they purchase, should their values continue to decline. The goal is to relieve the banks of their worst assets so that private investors might then provide more capital.

No matter what it is called, the government would assume some of the risk of declining assets at the heart of the economic crisis. But by relying on a combination of private investors and government guarantees, the administration hopes to reduce its exposure to losses and avoid the problem of having to place a value on assets that the institutions have been unable to sell.

A central element of the plan would be a major expansion of a lending facility begun in November by the Federal Reserve Bank of New York when it was headed by Mr. Geithner. The program, which was initially financed by $200 billion in Fed money and $20 billion in seed capital from the $700 billion bailout fund, lent money to investors to buy securities backed by student, auto and credit card loans, as well as loans guaranteed by the Small Business Administration.

I posted recently that the banks would get more bailout and so it begins….more to come….we have been right so far…..we will continue to predict and analyze…..

What Did Geithner Do?

Timothy Geithner, whose nomination as Treasury secretary has been delayed by his past failure to pay taxes, was repeatedly advised in writing by the International Monetary Fund that he would be responsible for any Social Security and Medicare taxes he owed on income he earned at the IMF between 2001 and 2004.

Questions about Mr. Geithner’s initial failure to pay more than $34,000 in taxes are clouding his prospects for confirmation. The Senate Finance Committee postponed Mr. Geithner’s confirmation hearing from a tentative Friday date to next Wednesday, which means President-elect Barack Obama will take office without a Treasury secretary amid the biggest financial crisis in decades.

Current and former IMF officials said the fund provided numerous warnings to U.S. employees about payroll taxes. According to IMF documents released by the Senate Finance panel, Mr. Geithner regularly received information about his tax obligations.

Mr. Geithner didn’t make any Social Security or Medicare tax payments on his income during the years he worked for the IMF, though he did pay income taxes. After the Internal Revenue Service audited him in 2006 and discovered the payroll-tax errors, Mr. Geithner corrected them for 2003 and 2004. Only after Mr. Obama picked him for Treasury secretary last fall did Mr. Geithner pay the Social Security and Medicare tax he owed for 2001 and 2002.

Funny how many of these white collar pricks that do not pay taxes, a priviledge most of us do not have.

Which Way To Throw The Cash?

It began as a taxpayer-financed fund to buy so-called toxic assets, shifted to one that injects capital into distressed banks, and is now veering toward propping up ailing U.S. automakers.

The $700 billion bailout fund administered by the Treasury Department has changed direction roughly in tandem with the economy’s deepening woes.

When it was first conceived, Treasury Secretary Henry Paulson said the fund would be used to buy unwanted or failing assets from financial institutions in a bid to clear the way for lenders to make more loans and loosen a credit crunch.

The sheer mechanics of setting up an operation inside Treasury to evaluate questionable assets that lenders might want to sell guaranteed a slow process, so by mid-November that tack had changed to stress putting capital into banks to ensure they had funds that, hopefully, they would lend.

While he, Paulson,  warned of the economic harm that could come if a major automaker failed, he argued the Treasury-run program was meant only to stabilize the financial sector.

But that apparently changed when the Senate balked at a bailout on Thursday night and the White House said funds from the financial bailout program might have to be used — another change in direction.

Out of the initial $350 billion Treasury has drawn down, only $15 billion is still uncommitted, although Paulson could redirect billions more he had pledged to pump into banks.

Looks like Paulson is not too thrilled with the prospect of helping workers, but he may have no choice in the end.

Treasury Gets Criticized

My first impulse was to yell, “YA THINK?”

Lawmakers criticized the Treasury Department’s handling of its $700 billion financial-industry rescue program, saying the effort had been mismanaged, and warned that no additional money would be forthcoming barring significant improvements.

In a hearing Wednesday, members of the House Financial Services Committee questioned Treasury Assistant Secretary Neel Kashkari over his agency’s handling of the Troubled Asset Relief Program, citing critical reports by the Government Accountability Office and an oversight panel appointed by Congress.

Lawmakers faulted Treasury for what they said was its failure to address the record numbers of foreclosures that continue to weigh on financial institutions and the broader economy after TARP was implemented in October in response to a credit crisis sparked by woes in the housing market. They also criticized what they described as the agency’s reluctance to ensure that banks are using billions of dollars in federal funds to lend to consumers and businesses.

Treasury has used or committed most of the money available in the first tranche of funds under TARP, with $15 billion remaining out of an original $350 billion. With financial markets still weak and the broader economy in recession, Treasury Secretary Henry Paulson has been trying to decide whether to seek access to the second half of the funds.

Geez, where were these people when the bailout was being pushed through Congress?  It is a little late to worry about how the money is being spent.  These guys were inept at handling the crisis which was predicted almost a year ahead of the fact.  If they could not see it coming, why would we trust them to fix it once it was broke.

And In This Corner–Team Obama

Obama made his comments as he unveiled the top members of his economic team, beginning with New York Federal Reserve President Tim Geithner to be his treasury secretary. Geithner, 47, is a veteran of financial crises at home and overseas and has worked closely with the Bush administration in recent months.

Obama chose Lawrence Summers as director of his National Economic Council. Summers was treasury secretary under former President Bill Clinton.

Obama said his newly minted economic team offered “sound judgment and fresh thinking” at a time of economic peril.

He expressed confidence the nation would weather the crisis “because we’ve done it before.”

Obama also announced two other members of his economic team in the making. He named Christina Romer as chair of his Council of Economic Advisers, and Melody Barnes as director of his White House Domestic Policy Council.

Obama declined to say how large a stimulus package he wants from Congress. Democratic lawmakers speculated over the weekend that the price tag could reach $700 billion over two years as the nation struggles to emerge from a recession compounded by a credit crunch. “It’s going to be costly,” the president-elect said.

He has chosen centrists for the team….people who will try to make sure that all remains the same on Wall Street.

And So It Begins

U.S. President-elect Barack Obama has chosen seasoned policymakers Timothy Geithner and Lawrence Summers as his two top economic lieutenants to direct the fight to rescue the economy and stem the worst financial crisis in more than 70 years.

Obama plans to nominate Geithner, 47, president of the New York Federal Reserve Bank and a former Clinton administration official, as Treasury secretary, a transition official said on Saturday.

A main part of his portfolio will be managing the $700 billion bailout for the troubled financial industry.

Summers, who served as Treasury secretary under former President Bill Clinton, will become director of the White House National Economic Council, the official said.

The 53-year-old Summers, who gained Obama’s trust by helping to guide his response to the financial meltdown during the campaign, will play a broad role in shaping policy and coordinating among other economic advisers.

The two Clinton-era veterans have worked closely together and both command wide respect in financial markets, which could take comfort in the announcement. Obama plans to formally unveil the picks at a news conference on Monday.

The picks come after Obama announced plans earlier on Saturday for an aggressive, two-year economic stimulus package as he warned that the economy was at risk of huge job losses and broadly falling prices if swift action is not taken.