Archive for Geithner

Don’t Ever Take Sides With Anyone Against the Family Again. Ever.

Hey, Timmy.

Wanna go fishing?

Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t. And if I have to enforce this discipline by veto, I will.
[Barack Hussein Obama, January 2010]

You know, I know it sounds terrible to say it this way, but that’s not the right objective for the government. Government is not like a family. It’s not like a business even. It’s different in that context. We think about a family as having to balance its budget and businesses over time of course have to generate enough revenues to do that.
[Timothy Fredo Geithner, June 2011]

People think Sarah Palin’s stupid and Michele Bachmann’s a flake because their every misstatement echoes and reverberates throughout the media. And that’s fine.

But if this administration were held to the same standard, Obama would have been impeached long ago for [high] criminal stupidity.

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A Bender to Oblivion

If you were to ask me why we continue to report on Obama’s ruinous economic policies, I would answer we do so for the same reason a person beats his head against the wall: it feels good when we stop.

Mark Steyn (as if you couldn’t tell):

Default, dear Brutus, is not in our stars

June 11, 2011 12:03 P.M.
By Mark Steyn

…but in ourselves. Chancellor Williamson noted this one yesterday afternoon in the Exchequer. While Little Timmy Geithner has been running around bleating that failing to raise the debt ceiling would risk default, the Chinese have concluded that we’re already defaulting:

A Chinese ratings house has accused the United States of defaulting on its massive debt, state media said Friday, a day after Beijing urged Washington to put its fiscal house in order.

“In our opinion, the United States has already been defaulting,” Guan Jianzhong, president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that gives sovereign ratings, was quoted by the Global Times saying.

Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said.

Geithner and Bernanke can protest all they want that debauching the currency and the left hand buying the right hand’s debt and quantitively easing yourself all day long like Congressman Weiner is so totally not like defaulting. But, if the dwindling ranks of buyers of Treasury debt around the world come to see it like that, that’s what counts.

Imagine what a man who’d been cryogenically frozen circa 1963 would make of the above wire story. Communist China has a debt rating agency? And it’s urging fiscal restraint on the US Government?

America has a looming rendezvous with destiny. You can’t tax your way out of it, you can’t inflate your way out of it, you can’t quantitively ease your way out of it. The only door that leads anywhere is the one marked “Massive Government Cuts”. There is not enough money on the planet for what the Permanent Governing Class is doing. If Americans decline to grasp that central truth, this country will die.

China is not making a petulant accusation; they are describing deliberate government policy. We are doing exactly what they say we are, on purpose, and for exactly the reasons they say.

And I leave it to the individual how to handle Steyn’s jeremiad “If Americans decline to grasp that central truth, this country will die.” I don’t make it a habit to best against him. He’s been wrong, but the big stuff he gets right.

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Giving Used Car Dealers a Bad Name

Remember those GM ads that boasted how they had repaid all debts to the government?

Neither does Obama:

The federal government knew of deceptive advertising by General Motors well in advance, and tacitly approved of it. Only later did federal officials distance themselves from those deceptive claims, after they drew criticism from an inspector general, Republican members of Congress, and even some journalists at liberal newspapers. Not, however, before the Treasury Secretary himself had trumpeted GM’s deceptive claims, which the Treasury Department had plenty of time to review before GM made them.

Documents just released by the U.S. Treasury Department in response to a Freedom of Information Act request make this clear. They show that General Motors and the Obama Administration coordinated PR strategy regarding GM’s much-criticized ad campaign in 2010, in which the car maker misleadingly claimed to have repaid what it received from taxpayers. In those ads, GM’s CEO at the time, Ed Whitacre, boasted that GM repaid its government bailout loan “in full, with interest, five years ahead of schedule.”

In May 2010, the Competitive Enterprise Institute (CEI) filed a deceptive advertising complaint with the FTC, and GM shortly thereafter stopped running the ads. CEI also filed a Freedom of Information request with Treasury for documents on the ad campaign. Those documents were finally released late last month, after a year of delay – far beyond the 20-day legal deadline for responding to FOIA requests.

“One year ago, the US Treasury Department aided General Motors in its fraudulent claim that it fully repaid its government loans,” said Sam Kazman, CEI’s General Counsel. “The detailed nature of their cooperation is demonstrated in the documents that the Department has finally produced, 12 long months after our original request. Now, the Treasury Department is re-enacting this smoke-and-mirrors routine on behalf of Chrysler,” he said.

The documents produced as a result of CEI’s FOIA request show GM coordinating PR strategy with the Obama Administration more than three weeks before launching the campaign. The Treasury Department sent some of those documents to the White House at least two weeks before the launch.

Didn’t we learn just yesterday that this was closer to the truth?

The White House said Wednesday that taxpayers could lose roughly $14 billion of the money spent on auto industry bailouts, despite the industry’s recent recovery.

The White House cites the potential losses in a report, “The Resurgence of the American Automotive Industry,” released ahead of President Barack Obama’s trip Friday to a Chrysler Group LLC facility in Toledo, Ohio.

The report said that of the $80 billion in bailout money supplied to the auto industry, less than 20%, or $16 billion, ultimately may be lost. That’s down from the 60% loss projected two years ago, the report said. The White House’s top auto and manufacturing adviser, Ron Bloom, later specified the loss at closer to $14 billion.

The U.S. could lose more than $10 billion in General Motors Co. alone if the government sold its remaining shares of the auto maker at current share prices.

If that’s “resurgence”, I’d hate to see “setback”. PU!

Anyway, the government publishes its own report acknowledging the billions in losses (aka “resurgence”) a year after co-conspiring with the automakers themselves to promote a bald-faced lie.

Wow. I have to give them credit. I can’t even imagine the ways in which they are sleazy. They keep surprising me!

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Anybody See a Problem?

Sorry it doesn’t fit, but you get the point:

The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.

Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With that limit reached Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.

Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers. The measure won’t have an impact on retirees because the Treasury is legally required to reimburse the program.

So, we’re not “borrowing from the children” after all; we’re borrowing from the grandparents. Maybe if we wait long enough to pay it back, they’ll die in the meantime, and then we won’t have to. (I’m just trying to save the Republic!)

Hey, AARP, how do you like him now?

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Transparent as S**t

I mean that literally and figuratively:

We supported TARP to deal with toxic bank assets and resolve failing banks as a resolution agency of the kind that worked with savings and loans in the 1980s. Some taxpayer money was needed beyond what the FDIC’s shrinking insurance fund had available. But TARP quickly became a Treasury tool to save failing institutions without imposing discipline (Citigroup) and even to force public capital onto banks that didn’t need it. This stigmatized all banks as taxpayer supplicants and is now evolving into an excuse for the Federal Reserve to micromanage compensation.

TARP was then redirected well beyond the financial system into $80 billion in “investments” for auto companies. These may never be repaid but served as a lever to abuse creditors and favor auto unions. TARP also bought preferred stock in struggling insurers Lincoln and Hartford, though insurance companies are not subject to bank runs and pose no “systemic risk.” They erode slowly as customers stop renewing policies.

TARP also became another fund for Congress to pay off the already heavily subsidized housing industry by financing home mortgage modifications. Not one cent of the $50 billion in TARP funds earmarked to modify home mortgages will be returned to the Treasury, says the Congressional Budget Office.

As of the end of September, Mr. Geithner was sitting on $317 billion of uncommitted TARP funds, thanks in part to bank repayments. But this sum isn’t the limit of his check-writing ability. Treasury considers TARP a “revolving fund.” If taxpayers are ever paid back by AIG, GM, Chrysler, Citigroup and the rest, Treasury believes it has the authority to spend that returned money on new adventures in housing or other parts of the economy.

Treasury and the Fed would prefer to keep TARP as insurance in case the recovery falters and the banking system hits the skids again. But the more transparent way to address this risk is by buttressing the FDIC fund that insures bank deposits and resolves failing banks. The political class has twisted TARP into a fund to finance its pet programs and constituents, and the faster it fades away, the better for taxpayers and the financial system.

Amen to that. But this administration is not about using existing programs (FDIC, Medicaid); it’s about funneling hundreds of millions of dollars to favored industries and companies. And punishing the unfavored.

On a related note, I wonder if it’s just coincidence that the one automobile company that didn’t take a penny of bailout money is about to turn a profit?

Indeed, Ford has managed to gain momentum during this historic recession. It has distinguished itself as the American automaker that proudly passed on taxpayer assistance. Through the first half of the year, Ford even eked out a profit of $834 million, although much of that was because of special onetime charges.

During the past two weeks, at least three Wall Street analysts have raised their estimates for Ford Motor Co.’s third-quarter financial results, with one, JP Morgan’s Himanshu Patel, estimating that Ford would report a profit of 16 cents per share for the July-September period when it reports results next Monday.

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Geithner Rant [UPDATED]

Some days I can’t tell if the paper I hold in my hands is the Wall Street Journal or The Onion.

Take today, for example. Front page article titled Geithner Vents As Overhaul Stumbles. I’m sorry that I can’t link it, but here’s a sample of the surreal world of today’s White House:

“Friday’s roughly hourlong meeting was describes as unusual, not only because of Mr. Geithner’s repeated use of obscenities, but because of the aggressive posture he took with officials form federal agencies generally considered inependent of the White House.”

Who did he swear at? Chair of the Federal Reserve, Ben Bernanke. Securities and Exchange Commission Chairman, Mary Schapiro. FDIC Chairman, Sheila Bair.

I’m reminded of Barack Obama’s remark about the fact that, as a youth, Rahm Emmanuel lost part of his middle finger in an accident. “It rendered him practically mute”.

Again, sorry I can’t link, but pick up a copy of the Wall Street Journal today to get a sense of Your Government.

You will also learn about how the Cybersecurity Chief (or is it Czar?) has quit. And how the Counsel might get canned.

Nice bunch. Classier than the Bushies, don’t you think?

- Aggie

BTL Updates:

Michell Malkin notes that FU is the default mode in the Obama White House. Sounds like Obama and Dick Cheney are closer cousins than they realized!

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Would You Buy a House From This Man?

Okay, Vigilant Reader Judi really needs to find something to do with her time. Until that tragic day comes, however, we are blessed that she sends us links to interesting—and hysterical—stuff:

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Home Crisis Investigation
www.thedailyshow.com
Daily Show
Full Episodes
Political Humor Joke of the Day

I bet Tim Geithner is a great guy to have a beer with—as long as he’s buying. But other than pouring free money into the coffers of the big banks (whose profits have amazingly skyrocketed as a result), what exactly has he done for the economy?

Even the supposed good news isn’t all that good when you look at it:

Alan Lancz, money manager at Alan B. Lancz & Associates, said the GDP report signaled the economy was improving, but he worries that investors are getting ahead of themselves and buying stocks as if the economy will rebound quickly off the bottom.

“The good news is it’s heading in the right direction and the bad news is the higher the market moves the more it’s discounting a V-shaped recovery,” he said.

The GDP report is the strongest sign yet that the recession is winding down. However, the Commerce Department revised the first-quarter GDP figure much lower, saying economic activity tumbled 6.4 percent. That is the worst quarterly reading in nearly 30 years.

The latest report also said consumers cut spending by 1.2 percent in the second quarter, after a 0.6 percent increase in the first quarter.

Investors have been looking to consumers to help lead the economy out of a recession. Spending has been cut as consumers continue to worry about jobs. The unemployment rate is expected to move higher after hitting a 26-year high of 9.5 percent in June.

“We’re still not in very good shape in the employment part,” said Steven Stahler, president of the Stahler Group in Baton Rouge, La., adding he doesn’t expect to see consumers leading the country of out recession soon.

Maybe the economy is bottoming out, but the next unemployment report is going to make that hard to sell. The statute of limitations for Blaming Bush is perilously close to running out. Soon, there will be lots of Obamavilles—shanty towns and tent cities reminiscent of the Hoovervilles of the Great Depression—blotting the landscape.

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Your Economic Recovery Story of the Day

Thank God for President Obama. Without his “stimulus” package and “saved” jobs, think of the mess we’d be in:

As job losses rise, growing numbers of American homeowners with once solid credit are falling behind on their mortgages, amplifying a wave of foreclosures.

In the latest phase of the nation’s real estate disaster, the locus of trouble has shifted from subprime loans — those extended to home buyers with troubled credit — to the far more numerous prime loans issued to those with decent financial histories.

With many economists anticipating that the unemployment rate will rise into the double digits from its current 8.9 percent, foreclosures are expected to accelerate. That could exacerbate bank losses, adding pressure to the financial system and the broader economy.

“We’re about to have a big problem,” said Morris A. Davis, a real estate expert at the University of Wisconsin. “Foreclosures were bad last year? It’s going to get worse.”

“We’re right in the middle of this third wave, and it’s intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “That loss of jobs and loss of overtime hours and being forced from a full-time to part-time job is resulting in defaults. They’re coast to coast.”

Fair-minded Americans wanted to give President Obama a chance. They didn’t like Rush Limbaugh’s (or my) rhetoric, rooting for his policies to fail. But it looks like that is what’s happened, whether we like it or not.

Strange that an administration so intent on creating jobs (or at least claiming to), can’t create even one where it might count:

Rick Wagoner is still on the Government Motors payroll, and Tim Geithner is still unable to staff the Treasury or get his programs running: These geniuses are bouncing around like the Thing One and Thing Two of the new American corporatism, a matched set.

Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department’s top ranks. But some of the officials also cite the Treasury’s ad-hoc management, which is dominated by a small band of Geithner’s counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.

Just call him Barack Hussein Brezhnev.

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Minding the Store

When we Bloodthirstani criticize President Obama, we can be (and are!) dismissed as knuckle-dragging troglodytes. Fair enough—except for Aunt Agatha, who would never drag her knuckles, as doing so might chip a nail.

But what about this fine example of homo gyno erectus?

warren

Until last year, Harvard Law School professor Elizabeth Warren was perhaps best known for her writing on bankruptcy and consumer finance. But last fall, she was appointed chair of a newly created Congressional Oversight Panel, which is charged with keeping tabs on the $700 billion bailout of the financial sector – an effort formally known as the Troubled Assets Relief Program.

Q: You’ve been quite critical of the Treasury. What troubles you most about what you’re getting and what you’re not getting?

A: There’s no discussion of the overall policy. Instead, there are specific programs that are announced, and from that, it’s necessary to reason backwards to figure out what the goal must have been. It’s like a “Jeopardy!” game. If this is the answer, what was the question? It’s frustrating because without a clearly articulated goal and identified metrics to determine whether the goal is being accomplished, it’s almost impossible to tell if a program is successful.

Q: Do you have a clear sense of what the overall TARP plan at this point is supposed to do? Are you capable of summarizing what it’s supposed to be doing?

A: No. And neither is Treasury. Treasury has given us multiple contradictory explanations for what it’s trying to accomplish.

There’s a major problem and a minor problem. The minor problem is documentation. I’ve spent four weeks now looking for someone who can give me the details of the stress test so that we can do an independent evaluation of whether the stress test is any good.

We get: “someone will call [you] right back.” Only the call doesn’t come.

The major problem is that Treasury has not articulated its goals. And without that, we can’t have a robust debate about whether they’re headed in the right direction; instead, we’re stuck with this more technical argument about the implementation of the [Term Asset-Backed Securities Loan Facility] or the details of the Capital Acquisition Program. And that misses the central question of, should we be subsidizing failing banks or liquidating them? When we acquire capital, should we exercise more control over the institutions that take the money or less control? Those are the central policy issues that the American public has a right to participate in.

Can I get an amen?!

Who do you trust—someone like Elizabeth Warren, or Lonesome Tim Geithner, who, as far as I know is still holed up in Treasury like some Howard Hughes recluse?

lol

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Swinging a Dead Cat in Treasury

Give that feline fatality a job!

It’s not like Tim Geithner can afford to lose any of the few officials who are actually working at the Treasury Department with him, but last night, he put one on leave.

The acting director of the Office of Thrift Supervision has been put on leave pending a review of the agency’s role in the backdating of capital infusions by some banks, the agency said Thursday evening.

OTS said in a surprise statement that Scott Polakoff, who has been serving as acting director of the OTS, would be replaced by OTS Chief Counsel John Bowman during the review by the Treasury Department.

Office of Thrift Supervision: do they count paper clips and stockpile scrap paper?

Not exactly:

When Ben Bernanke told the Senate Budget Committee that American International Group (AIG) “exploited a huge gap in the regulatory system” and that “there was no oversight of the Financial Products division,” it seemed to make sense. The Federal Reserve Chairman went on to say, “This was a hedge fund basically that was attached to a large and stable insurance company.”

If nobody was keeping an eye on them, well no wonder it blew up.

But it turns out Mr. Bernanke was not quite accurate when he said “no oversight.” He made that statement on March 3rd.

“We were clearly responsible as a consolidated regulator for FP,” says Polakoff, and adds, “We, in 2004, should have taken an entirely different approach than what we wound up taking regarding the credit default swaps.” By now, the term credit default swap is practically a barbershop term, but basically it’s just a sort of insurance policy on another financial product like a mortgage-backed security (often stuffed with foreclosed mortgages, as we have all learned to our sorrow).

So when Mr. Polakoff says they should have taken a different approach, what he’s really saying is that the OTS regulators weren’t sophisticated enough to realize that FP was heading for BIG trouble. And why should they have been that prepared? OTS mostly regulates S&L’s which generally take deposits and then make loans for houses and other purposes. Would you expect these civil servants to really understand the risks attached to derivatives that are designed by Math PhD’s to play the odds on pieces of paper that “derive” their value from a mortgage backed security that can’t be valued itself (except maybe by another math nerd).

Who hasn’t backdated the odd multi-million dollar bank draft once or twice?

Or was he canned for speaking truth to power? It is certainly true that these derivatives are beyond the understanding of mere mortals. Why fire him for that? Why not just blame Bush, which is the default position of this administration for everything—and in this case might just be true?

You know who Lonesome Tim Geithner, holed up in the empty halls of Treasury, reminds me of? Remember the Once-ler from Dr. Seuss’s The Lorax?

onceler

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A Man, A Plan, A Catastrophe: Geithner!

cristina

Not again!

I really have to delete my Aura Cristina Geithner files (but who has that much time?)

Besides, she appears to have more professional colleagues than this guy:

geithner

[T]oday’s scoop on the plan from Tim Geithner and Barack Obama on how to fix the economy. To no one’s great surprise, it involves more regulation and intervention by the government, but the only thing clear about it is that Geithner and Obama still don’t have specifics.

Officials said the proposal would seek a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.

And to protect consumers, it will call for federal standards for mortgage lenders beyond what the Federal Reserve adopted last year, as well as more aggressive enforcement of the mortgage rules.

The big splash for this story was that it showed the Obama administration going after executive pay, even in areas where government regulation doesn’t reach now. However, a closer look at the Times article shows that the Obama administration has no idea how it will do it, where it will go, or even if it wants to take that leap in any real way:

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

In other words, on the 62nd day of his administration, President Obama and Lonesome Tim Geithner haven’t a freakin’ clue what to do, except, probably, to nail wealthy executives to the cross.

The only consistent lesson in the entire economic breakdown we’ve been living through is that government intervention—be it from Barney Frank, Chris Dodd, Henry Paulson, Tim Geithner, et al—leads to ruin.

I suppose I should amend that to say that governments (and their central banks) have a role to play, just not the one they’ve been playing.

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We’re All Gerald R. Ford Now

The Maimonides of Michigan proves right again: “A government big enough to give you everything you want is a government big enough to take from you everything you have.”
Presidential address to a joint session of Congress (12 August 1974)

“A central aspect of the plan, which has already been announced by the administration, would give the government greater authority to take over and resolve problems at large troubled companies not now regulated by Washington, like insurance companies and hedge funds.

That proposal would, for instance, make it easier for the government to cancel bonus contracts like those given to executives at the American International Group, which have stoked a political furor. Under the proposal, the Treasury secretary would have the authority to seize and wind down a struggling institution after consulting with the president and upon the recommendation of two-thirds of the Federal Reserve board.”

(Of course, Ford also said there is no Soviet domination of Eastern Europe.)

You’d think Congress would have learned its lesson not to grant enormous executive powers to mere Treasury Secretaries—but then when has Congress ever learned anything?

We used to employ the term “czar” (“tsar” to crossword puzzle aficionados) ironically to appointed heads of certain government initiatives. But now we mean it.

All hail Czar Timothy I!

cristina

Dang! Sorry, wrong Geithner.

Here we go:

geithner

You’re in good hands with the all-powerful state.

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