Felix Salmon

Bloggers @ Treasury

By Felix Salmon
March 8, 2010

Treasury had its second big blogger meeting today, where Tim Geithner and other Senior Administration Officials (sorry, ground rules) fielded questions from a group of bloggers* which tilted heavily towards the newsier end of the spectrum. The Center for American Progress was there in force, as were the Atlantic and the Huffington Post; the less corporate bloggers from last time round (David Merkel, Tyler Cowen, Yves Smith, Steve Waldman, John Jansen, Michael Panzer, Kid Dynamite) were absent this time.**

I can’t quote what anybody said, even anonymously, but I can tell you that the message from Treasury was that financial reform is not dead in the Senate, and that in fact on some matters, including derivatives reform, there’s real hope that the Senate can put something together that’s even stronger than what the House passed. I’ll believe it when I see it, but the general idea seems to be that so long as something gets out of committee, the final bill might actually have some teeth.

Have we reached the point at which we’ve wasted our crisis? The official Treasury talking point is that we haven’t, and that there’s a window of time through the end of this year in which there’s still some political urgency left; after that, passing something strong will get harder. Again, I think they’re just trying to make the best of a bad situation — that we’re still months away, in a best-case scenario, from a bill actually reaching the president’s desk, and that by then (fingers crossed) the crisis will be more of a distant memory than ever.

I did ask about credit default swaps, in the light of the latest moves by European governments to place blame derivatives and speculators for their debt woes, and got a pretty encouraging answer: it’s pretty clear that Treasury reckons debt woes should be addressed with fiscal measures, and doesn’t think much of banning naked CDS or anything like that.

HuffPo’s Shahien Nasiripour was on great form, and seemed to be much more on top of the Treasury brief than most of the officials we were talking to. He asked a great question about people walking away from their mortgages, and was told that no one in Treasury would ever officially countenance such behavior — but I did get the impression that the actual human beings there, in their personal capacity, might not necessarily agree with the official view. The answer was more “we’d never say that people should walk away” than “we don’t believe that people should ever walk away”.

There was also a little bit of talk about the higher capital requirements for bigger banks. That’s not part of the financial regulatory reform bill, because Treasury already has the authority to implement it unilaterally. The idea is that the exact requirements will be decided upon by the end of this year, in consultation with the G7, and that they will then be phased in over 2011 and 2012, coming into full force in 2013. There’s no real indication of where they’re going to be set, just that they’ll be more stringent than the requirements currently in place.

More generally, I came away with the impression that life at Treasury is not much fun, on a day-to-day basis, and that the stresses of trying to set economic policy in the face of strong opposition from both the banking lobby and the Republican party are wearing on the officials there. And I also came away with a photocopy of John Cassidy’s piece on Geithner in this week’s New Yorker: each of us got given it as some kind of Treasury party favor.

Josh Green has a big Geithner profile too, and now Treasury was inviting us bloggers in, and then there was that Vogue piece — there does seem to be some kind of PR offensive going on. But I’m not nearly enough of a Washington insider to hazard a guess as to who’s responsible, or why they might be doing it. But I’m sure it’s going to be a topic of conversation at the post-meeting dinner.

*Daniel Indiviglio, Megan McArdle, Matthew Yglesias, Patrick Garofalo, Amanda Terkel, John Aravosis, Faiz Shakir, John Amato, James Kwak, Duncan Black, Sam Stein, Shahien Nasiripour, Ryan Grim, David Kurtz, Tim Fernholz, and me.

**Update: It turns out that this was a deliberate policy: no one who came to the last meeting was invited to this one. James Kwak, Megan McArdle, and I all for various reasons couldn’t make the last one, so were invited to this one. But Treasury has a somewhat weird policy of “maximizing touch” and therefore not repeating any blogger.

6 comments so far | RSS Comments RSS

What’s your sense of Treasury’s angle in holding these meetings? Is it just a matter of inflating these bloggers’ sense of self-importance in the hopes that the goodwill created thereby might translate into more favorable coverage of the reform package?

Or are they simply looking to co-opt like-minded, influential mouthpieces? (“Listen, here’s what we want to fight for re: financial reform. If you’re on board, help us spread the good word.”) Seems to me these blogger@Treasury meetings are more than just another part of a vanilla PR blitz. I mean, why embargo any meaty quotes if you’re trying to get word out? So what then? Did anyone ask the question, “Why are we here?”

Posted by Sandrew | Report as abusive


Do you find it interesting that non-corporate indie bloggers are no longer welcome at Treasury? Seems like a hell of a lot more of a “get out the message” meeting than trying to solicit for opinions/ideas.

Posted by sashae | Report as abusive

…”there does seem to be some kind of PR offensive going on.”

Ya’ think????

Posted by maynardGkeynes | Report as abusive

FS: “Again, I think they’re just trying to make the best of a bad situation — that we’re still months away, in a best-case scenario, from a bill actually reaching the president’s desk, and that by then (fingers crossed) the crisis will be more of a distant memory than ever.”

You must be joking. I can assure you that for every person who has lost his job and won’t find another one anytime soon, the crisis will not be a “distant memory”. The anger will be as strong then as it is now and as it was in 2008.

“The past is not dead, it’s not even past”

Posted by EmilianoZ | Report as abusive

Felix, you are right that a lot of people are making a lot of mistakes trying to understand CDSs with respect to Greece. But if you are a journalist and not merely a commenter, can you dig into the real question, which is, who are the CDSs counterparties? It would really be great if you could get your hands on copies of a few of these contracts and bring light to the world.

CDS counterparties are rumored to include banks in Greece (according to BNP Paribas, as cited in Bloomberg), which would mean that they certainly cannot pay. Their value comes in part from the hope that should Greece go bust, taxpayers will take over these banks and make these payments. That was what happened last time and the world did not end, so it looks to policymakes like a great plan.

Greek CDSs are grossly mispriced. They are at like 160 basis points over the safest debt which would mean that CDS pricing is based on merely about an 8% chance of Greek default in 5 years.

Why? Who is insuring at such prices?

Posted by DanHess | Report as abusive

“But Treasury has a somewhat weird policy of “maximizing touch” and therefore not repeating any blogger.”

Ah, good. So when they get to holding the 92nd such meeting, which cookies should I snarf quickly?

Posted by klhoughton | Report as abusive

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