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Tuesday, February 10, 2009

Tim Geithner: Taking care of his own
Posted by Jill | 5:35 AM
Somehow I don't have a whole lot of faith in Tim Geithner's ability or willingness to be a champion for the middle class, and this doesn't exactly give me any more:
In the end, Mr. Geithner largely prevailed in opposing tougher conditions on financial institutions that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials.

Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.

[snip]

He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.

The $500,000 pay cap for executives at companies receiving assistance, for instance, applies only to very senior executives. Some officials argued for caps that applied to every employee at institutions that received taxpayer money.

Abandoning any pretense about limiting the moral hazards at companies that made foolhardy investments, the plan also will not require shareholders of companies receiving significant assistance to lose most or all of their investment. Some officials had suggested that the next bailout phase not protect existing shareholders. (Shareholders at most banks that fail will continue to lose their investment.)

Nor will the government announce any plans to replace the management of virtually any of the troubled institutions, despite arguments by some to oust current management at the most troubled banks.

Finally, while the administration will urge banks to increase their lending, and possibly provide some incentives, it will not dictate to the banks how they should spend the billions of dollars in new government money.

And for all of its boldness, the plan largely repeats the Bush administration’s approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis and failed to foresee many of the problems plaguing the markets.


In the last few months, we've seen automobile workers -- people with no decision-making capacity, excoriated by the right (and by many of their fellow Americans) as "welfare recipients" simply for having an advocate for pay and benefits and doing actual work. But here we have the Treasury Secretary of a Democratic president, taking care of his Wall Street buddies with taxpayer cash, and no one utters a peep. When workers collect unemployment, we have to be prepared to present evidence we are looking for a job. And yet, if you are a banker, and you have run not just the company you run, but also the economy as a whole, you get the Treasury Secretary saying that we shouldn't make you account for how you spend the taxpayers' money when you've already shown that you can't handle anyone's money.

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Blogger Jayhawk said...
France had only one bank in trouble, I read (and cannot find the reference right now), from investing in too many of the American CDO's. It was lent government money and, they day the money was received, the management was fired and escorted off of the premises.
2/10/09, 12:31 PM  
Blogger Unknown said...
I was really happy with the Geithner pick when I first heard about it. Now I'm trying to remember why. I even defended the turning of a blind eye to his tax troubles because I thought he was as good as we were likely to get. Now? After watching him today? I'm starting to miss Hank Paulson.
2/10/09, 3:36 PM  
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