Geithner: Look forward in anger

August 4, 2009

So Timothy Geithner went ballistic and started throwing around some obscenities during a meeting at the Treasury over the slow pace of financial regulatory reform.

Well, good for him. It’s about time someone in the Obama administration got a little red in the face over the financial crisis.

But here’s the thing: the Treasury Secretary’s temper tantrum was misdirected and he ended up taking his anger out on the wrong parties. The people Geithner really needs to be delivering a few choice words to are the nation’s bankers — especially the ones who were bailed out by U.S. taxpayers and now act as if last fall never happened.

What’s really needed now is for Geithner to get in the face of big bank honchos like JPMorgan Chase’s Jamie Dimon and Bank of America’s Ken Lewis and tell them to start moving on mortgage modifications, in order to keep people in their homes and stop the wave of foreclosures.

He needs to read the riot act to Goldman Sachs’ Lloyd Blankfein and tell him the government didn’t save his firm so it could go back to running the biggest hedge fund in the world.
And Geithner should muster up the necessary vitriol to tell Citigroup’s Vikram Pandit it’s time for him to pack his bags and leave town. Pandit’s decision to move back into risky proprietary trading is an indication that Citi, aka The Bank of the United States, will never change its ways under its current leadership.

Now I’ve got no problem with Geithner losing his cool with Mary Schapiro in the room, as The Wall Street Journal and Reuters reported he did. (Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp Chairman Sheila Bair also attended the meeting.)

The verdict is still out on whether Schapiro has the stomach to shake the lethargy out of the Securities and Exchange Commission, given her uneven track record at the Financial Industry Regulatory Authority and its predecessor regulator, NASD.

Bernanke, despite bearing a lot of the blame for getting us into the crisis, has performed rather admirably since the collapse of Lehman Brothers. It’s fair to say that the steps taken by Bernanke to pump liquidity into the financial system have done more to stabilize the economy than anything the Obama administration has done.

And Bair is the only regulator — maybe the only public official in Washington — who seems to be thinking outside the box these days when it comes to overhauling the financial system. Her call for some sort of special tax on too-big-to-fail banks may be the best way to rein in unbridled risk taking at Wall Street firms like Goldman.

So, by all means, get mad, Tim Geithner. But next time please sink your teeth into the people responsible for getting us into this mess and who remain as unapologetic as ever for their actions.

10 comments

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Goldman Sachs was the biggest packager and seller of collateralized debt obligations (CDOs), packaging thousands of mortgages together, 75% subprime, yet passing them off as AAA paper. When the market deteriorated, Goldman made profit by selling them short.

And many retirees, mutual funds, and city governments who bought these bonds with assurances of Goldman sales people were badly hurt.

Goldman Sachs also was a large purchaser of credit default swaps (CDSs), many from AIG. Representatives from Goldman placed pressure on Hank Paulson for government bailout funds for AIG. And where did billions of those bailout funds go? To pay off Goldman!

And we the taxpayers are picking up the tab.

Goldman Sachs developed computer algorithms for high frequency trading. As such, they insert themselves in rising or falling stocks, buying and selling with lightening speed and making huge profits.

As a result, the individual investor buys these stocks at higher prices and sells them at lower prices.

Goldman Sachs is profiting from the financial crisis recovery by taking the same huge risks with a bonus-driven culture.

And they have covered this risk by changing their designation from an investment bank to a bank holding company, which enables them to get FDIC protection and almost free Fed money.

So, please tell me how Goldman Sachs’ activities and business model benefit our society as a whole by creating financial products that contribute to the growth of American financial industry? What do they do that is valuable to other people? Or does Goldman merely create financial gimmicks to make money for Goldman, leaving the crumbs for the rest of us, and subjecting individual investors to a stock market with a casino mentality?

Posted by Joanne | Report as abusive

I tried to email to : post to goldstein@thomsonreuters.com but it returned. So excuse me for sending through here:

Hi Matthew

I have a question about the article “French judges probe firms over
vaccinations -source” published in reuters in february 2008, about an
investigation against the Sanofi Pasteur and Merk laboratories over
the non-disclosure of the side-effects of the vaccine against
heppatitte B. Congratulations for publishing quite an important
information.

How was the development of the case? I haven’t seen anything in reuter
since then.

http://www.reuters.com/article/rbssHealt hcareNews/idUSL0173467120080201

The financiers of our nation have hijacked the free markets and transformed them into their own casino. Peter seems to be paying Paul as the government bails out all entities, insurers, bankers, private industry and even the US taxpayer.

Over the past 30 some odd years the US adoption of deregulated ‘free markets’ has transformed our country into a banana republic, with one exception. It’s citizens have never lived in the conditions of most of the citizens of a 3rd world nation. How will American citizens react in mass if the US is forced either into a disciplined economic austerity plan or bankruptcy. Either road taken leads to rebellion. How these institutions and their leaders fare while the citizens of the country act out in anger during the insuing chaos will an ‘outlier’ event as even today during seemingly ‘calm’ times private citizens are arming themselves to the gills.

Posted by csodak | Report as abusive

Yeah right. Let’s see the guard dog turn on his masters.

Posted by StevenKs | Report as abusive

Give me 15 seconds with geithner in the ring. I’d knock him out! He needs a good butt kickin’.

Posted by jason | Report as abusive

So who did he exactly went ballistic on, other then Schapiro? And what is wrong if he went ballistic on Bernanke or Bair? They need to be scrutinized on every move they make and they should be able to digest any constructive criticism. Perhaps Geithner needed to express his feelings at this meeting.

Posted by MarcK | Report as abusive

Geithner should be in prison for what he’s conspired and conspiring to do to this country. Might as well throw Bush, Cheney, Rummy, Powell, Wolfie, Rice, Obama, Paulson, Bernanke, Blankfein, Lewis, Thain, etc etc all in prison too. I’d prefer if they were all waterboarded too. It’s not torture according to our Govt.

Posted by Rockefeller | Report as abusive

To the gentleman who wrote this blog…I will agree with the commenter who stated that this crook should be thrown into jail for his crimes. How dare timmy giethner lose his temper? He has no room at all to scream and yell. The American public, its patriots, should be the party that gets red in the face and screams in frustration at this administration who is worse than bush the lesser. Lets put away the flowery words and lovely stature of our current dictator and look at him for what he is really doing. Not just holding to the previous administrations policies, but actually, rapidly expanding upon them in a way that has not been seen in this country at any time in its history. People! It is time to stand up for what we know is right! We can not sit back, watch American Idol, and wait for somebody else to do the work. If you want change, look in the mirror! Tim Geithner is a known crook, and what he was really yelling about is the rumblings about auditing the Federal Reserve, the private central bank that issues our currency, that masqurades as a part of the government but which is a Federal as Federal Express. Audit the Fed!! Better yet, fight to end the Fed! We have been warned from Jefferson on down that if we allow a private central bank to dictate our currency “children will wake up homeless on the land that their fathers conqured.” In closing I would like to remind all Americans that the tree of liberty must from time to time be refreshed with the blood of tyrants and patriots. Dark words for dark times. Stand Up!

Yes he did need to yell at the regulators. They are also part of the problem and, in some cases, not doing their jobs by making sure the banks were operating properly. Let’s not forget the Indymac regulator was the same regulator who helped create the Savings and Loan debacle. Why he was even still a regulator is beyond me. So everyone needs to get onboard and start doing the right thing for the country not for themselves.

Posted by bckrd1 | Report as abusive

It’s time this stopped. This sort of thing should be made illegal. The institutions don’t do any good for mankind so it’s now time to regulate them into a box.

Posted by Sean | Report as abusive