Archive for the ‘Congress’ Category

The Democratic Congress’s Cover-Up; Our Biggest Danger

March 28, 2009

With a bit of bookkeeping legerdemain borrowed from the Bush administration, the Democratic Congress is about to perform a cover-up on the most serious threat to America’s economic future.

David S. Broder
The Washington Post

That threat is not the severe recession, tough as that is for the families and businesses struggling to make ends meet. In time, the recession will end, and last week’s stock market performance hinted that we may not have to wait years for the recovery to begin.

The real threat is the monstrous debt resulting from the slump in revenue and the staggering sums being committed by Washington to rescuing embattled banks and homeowners — and the absence of any serious strategy for paying it all back.

The Congressional Budget Office sketched the dimensions of the problem on March 20, and Congress reacted with shock. The CBO said that over the next 10 years, current policies would add a staggering $9.3 trillion to the national debt — one-third more than President Obama had estimated by using much more optimistic assumptions about future economic growth.

Read the rest:
http://www.washingtonpost.com/wp-dyn/c
ontent/article/2009/03/27/AR2009032
702507.html?hpid=opinionsbox1

President, Congress, Media “Vacant” in Time of Crisis

March 25, 2009

We live in interesting time and cripples are running the nation.

“What kind of politician brings a teleprompter to a news conference? asked the Associated Press’ Ron Fournier.

Well, what kind of lawmaker enacts a law by voting for it even though he or she never read it?  Our Congress on the stimulus.

Then they threw a fit because AIG paid bonuses: which were protected in the stimulus legislation they voted for…

In one of the nations’ biggest crisis since World War II, our leadership is, well, found wanting….

Reading the teleprompter instead of reading the legislation.  This is the White House and Congress of no work, TV appearances and Nancy Pelosi’s cats on YouTube.

This is the media found wanting presidency too.

The president’s  only flash of emotion  came in last night’s news conference when pressed by CNN’s Ed Henry about his slowness in decrying the AIG bonuses.

“It took us a couple of days because I like to know what I’m talking about before I speak,” he replied.

And write remarks and get them into the teleprompter.  Roosevelt responded to Pearl Harbor faster…..

Said Andrew Kohut of the non-partisan Pew Research Center, “In so many of these cases, he has to say, “Yes, but …’ ”

We want our leaders to think.  Not just make appearances.
Less than one month ago, while President Barack Obama was still making his own budget with his own numbers (and everything was rosy) he assured reporters that he likes being president.

“And it turns out I’m very good at it,” he said.

One month later, nobody can be sure that the president is good at anything.

President Barack Obama's TelePrompTer is seen before a news ...

President Barack Obama’s TelePrompTer is seen before a news conference in the East Room of the White House in Washington, Tuesday, March 24, 2009.(AP Photo/Gerald Herbert)

***********************

See USA Today:
http://www.dailyrecord.com/articl
e/20090325/UPDATES01/903250419

 Obama Throws In The Towel

 After Leno, Laughter on “60 Minutes,” Boredom From “No Drama” Obama

Geithner Plan Robs Taxpayers, Empowers Geither and Obama, May Enrich Select Firms

March 24, 2009

“Quite frankly, this amounts to robbery of the American people. I don’t think it’s going to work because I think there’ll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer.”

That’s from Nobel Prize-winning economist Joseph Stiglitz.  He is also a former World Bank chief economist.

“The Geithner plan is very badly flawed,” Stiglitz said.

Under the Geithner plan, the Federal Government would offer private investors with more than 90 percent of the funds to buy the troubled or toxic assets — that’s taxpayers’ money.

If the value of the assets goes up, the private firms make a profit and the taxpayers get their costs back.

If the value of the assets goes down, the taxpayers lose.

Either way, the money gets made not by taxpayers but by private companies.

The other problem with the Geithner plan is Geithner himself.  As he said today before the House Financial Sevices Committee, he wants to have more power to step in when big non-bank financial firms are in trouble.

No one man should have that kind of power over private businesses, in our opinion, and certainly Geithner has not earned any confidence to allow us to even seriously consider the idea.

If Obama did not like Geithner’s moves into private business, his only recourse would be to fire Geithner and get a new Treasury Secretary…..

House Republican leader John Boehner told reporters the Treasury’s request for authority to shutter non-banks sounded like “an unprecedented grab of power.”

But many Democrats like the Geithner plan.

“I welcome it,” Senate Banking Committee Chairman Christopher Dodd told reporters. “We’ve got to figure out a way to deal with this.”

President Obama said on Tuesday he hopes “it doesn’t take too long to convince Congress” to approve the kind of authority Mr. Geithner and Mr. Bernanke were talking about.

Stiglitz has long called for the U.S. dollar to be replaced as the only reserve currency.

Basing a reserve system on a single currency whose strength depends on confidence its own economy is not a good basis for a global system, he says.

“We may be at the beginning of a loss of confidence (in the U.S. dollar reserve system),” he said. “I think there is support for some sort of global reserve system.” 

Stiglitz was interviewed by Reuters.

http://www.cnbc.com/id/29848741

See also:
http://news.yahoo.com/s/nm/20090
324/ts_nm/us_financial_aig

*******************

From Geithner’s statement today:

The Administration proposes legislation to give the U.S. government the same basic set of tools for addressing financial distress at non-banks as it has in the bank context.

The proposed resolution authority would allow the government to provide financial assistance to make loans to an institution, purchase its obligations or assets, assume or guarantee its liabilities, and purchase an equity interest.

The U.S. government as a conservator or receiver would have additional powers to sell or transfer the assets or liabilities of the institution in question, renegotiate or repudiate the institution’s contracts (including with its employees), and prevent certain financial contracts with the institution from being terminated on account of the conservatorship or receivership.

This proposed legislation would fill a significant void in the current financial services regulatory structure with respect to non-bank financial institutions. Implementation would be modeled on the resolution authority that the FDIC has under current law with respect to banks.

Before taking any emergency action, the Treasury Secretary would need to determine that resolution authority is necessary upon the positive recommendations of the Federal Reserve Board and the appropriate federal regulatory agency.

Read the entire statement:
http://www.foxbusiness.com/story/marke
ts/business-leaders/read-treasury-secret
ary-tim-geithner-testimony/

Obama Wants To Take Over Companies; Complains Congress Might Take Too Long

March 24, 2009

President Barack Obama says he hopes “it doesn’t take too long” for Congress to approve new authority to oversee financial firms — and even take them over by the Federal Government if they are in economic trouble.

The president made the remark in the Oval office Tuesday afternoon, March 24, 2009.

The administration is pushing the idea of an overarching regulator, such as the Federal Reserve, to have the ability to take over nonbank financial entities whose failure could topple the entire financial system.

Congress has gotten us into trouble recently by rushing through important legislation or hearings.

The congress held no hearing on the president’s stimulus spending measure — with many member saying they didn’t have time to read it.

The stimulus assured AIG that it had the authority to pay bonuses.

Then the House last week rushed to vote a 90% tax on those same bonuses….an idea that could be unconstitutional…. and is certainly questionable….

Most fast legislation is very bad legislation, in our experience….

 Geithner Wants To Seize Troubled Businesses: “By What Authority in the Constitution?”

Obama “Strongly Approve” Number from 42% to 36% in Last 60 Days; Geithner 24% Or Less

See Michelle:
http://michellemalkin.com/2009/03/24/the-sen
ate-shows-a-little-sense-confiscatory-republica
ns-show-no-shame/

Related:
http://www.frugal-cafe.com/public_html/frugal-
blog/frugal-cafe-blogzone/2009/03/21/wait-ha
ste-made-the-mess-sen-kyl-blocks-aig-punish
ment-bill-to-allow-level-headed-review/

US President Barack Obama (R) speaks with Australian Prime Minister ... 
US President Barack Obama (R) speaks with Australian Prime Minister Kevin Rudd in the Oval Office of the White House in Washington, DC. Obama said Tuesday he hoped to partner with Rudd for “years to come” after forging a “meeting of the minds” in their first White House talks.  During this meeting, Obama told reporters, he hopes “it doesn’t take too long” for Congress to approve new authority to oversee financial firms .(AFP/Jim Watson)

Obama Wants Confidence To Revive the Economy: But Hasn’t Earned Any

March 24, 2009

Am I supposed to have confidence when the president praches “You can have everything: health care and the rest.  Just let me give your kids this debt.”

Seems counter-intuitive….

Am I supposed to trust Turbo Tax Geithner?  YIKES.

Hillary, Rahm Emanuel, Robert Gibbs?

Am I supposed to trust the House of Representatives and Nancy Pelosi?

Pelosi is telling  illegal immigrats the law enforcers are anti-America.

Should I trust the Senate?  Chris Dodd has amnesia and a retirement spot in Ireland, thanks to his government “service.”

I feel like a farm animal who just got “serviced” by one of the bulls…

Has Dodd given back the AIG donations to his campaign —  after he wanted AIG bonuses repaid?

Senator Judd Gregg deadpanned today, “Americans started a revolution because a far off king abused his tax authority….”

HA!  A bit of hope from the Senate!

In the Senate, the buck really has to stop now for conservatives…..

Read Michelle Malkin:
http://michellemalkin.com/2009/03/24
/the-senate-shows-a-little-sense-confi
scatory-republicans-show-no-shame/

********************

With the braying of 328 yahoos — members of the House of Representatives who voted for retroactive and punitive use of the tax code to confiscate the legal earnings of a small, unpopular group — still reverberating, the Obama administration yesterday invited private-sector investors to become business partners with the capricious and increasingly anti-constitutional government. This latest plan to unfreeze the financial system came almost half a year after Congress shoveled $700 billion into the Troubled Assets Relief Program, $325 billion of which has been spent without purchasing any toxic assets.

By George F. Will

TARP funds have, however, semi-purchased, among many other things, two automobile companies (and, last week, some of their parts suppliers), which must amaze Sweden. That unlikely tutor of America regarding capitalist common sense has said, through a Cabinet minister, that the ailing Saab automobile company is on its own: “The Swedish state is not prepared to own car factories.”
.
Another embarrassing auditor of American misgovernment is China, whose premier has rightly noted the unsustainable trajectory of America’s high-consumption, low-savings economy. He has also decorously but clearly expressed sensible fears that his country’s $1 trillion-plus of dollar-denominated assets might be devalued by America choosing, as banana republics have done, to use inflation for partial repudiation of improvidently incurred debts.

From Mexico, America is receiving needed instruction about fundamental rights and the rule of law. A leading Democrat trying to abolish the right of workers to secret ballots in unionization elections is California’s Rep. George Miller who, with 15 other Democrats, in 2001 admonished Mexico: “The secret ballot is absolutely necessary in order to ensure that workers are not intimidated into voting for a union they might not otherwise choose.” Last year, Mexico’s highest court unanimously affirmed for Mexicans the right that Democrats want to strip from Americans.

Congress, with the approval of a president who has waxed censorious about his predecessor’s imperious unilateralism in dealing with other nations, has shredded the North American Free Trade Agreement. Congress used the omnibus spending bill to abolish a program that was created as part of a protracted U.S. stall regarding compliance with its obligation to allow Mexican long-haul trucks on U.S. roads. The program, testing the safety of Mexican trucking, became an embarrassment because it found Mexican trucking at least as safe as U.S. trucking. Mexico has resorted to protectionism — tariffs on many U.S. goods — in retaliation for Democrats’ protection of the Teamsters union.

NAFTA, like all treaties, is the “supreme law of the land.” So says the Constitution. It is, however, a cobweb constraint on a Congress that, ignoring the document’s unambiguous stipulations that the House shall be composed of members chosen “by the people of the several states,” is voting to pretend that the District of Columbia is a state. Hence it supposedly can have a Democratic member of the House and, down the descending road, two Democratic senators. Congress rationalizes this anti-constitutional willfulness by citing the Constitution’s language that each house shall be the judge of the “qualifications” of its members and that Congress can “exercise exclusive legislation” over the District. What, then, prevents Congress from giving House and Senate seats to Yellowstone National Park, over which Congress exercises exclusive legislation? Only Congress’s capacity for embarrassment. So, not much.

The Federal Reserve, by long practice rather than law, has been insulated from politics in performing its fundamental function of preserving the currency as a store of value — preventing inflation. Now, however, by undertaking hitherto uncontemplated functions, it has become an appendage of the executive branch. The coming costs, in political manipulation of the money supply, of this forfeiture of independence could be steep.

Jefferson warned that “great innovations should not be forced on slender majorities.” But Democrats, who trace their party’s pedigree to Jefferson, are contemplating using “reconciliation” — a legislative maneuver abused by both parties to severely truncate debate and limit the minority’s right to resist — to impose vast and controversial changes on the 17 percent of the economy that is health care. When the Congressional Budget Office announced that the president’s budget underestimates by $2.3 trillion the likely deficits over the next decade, his budget director, Peter Orszag, said: All long-range budget forecasts are notoriously unreliable — so rely on ours.

This is but a partial list of recent lawlessness, situational constitutionalism and institutional derangement. Such political malfeasance is pertinent to the financial meltdown as the administration, desperately seeking confidence, tries to stabilize the economy by vastly enlarging government’s role in it.

Geithner Aides Worked With AIG for Months on Bonuses

March 23, 2009

Since the fall, senior aides to Timothy Geithner have closely dealt with American International Group Inc. on compensation issues including bonuses, both from his time as president of the Federal Reserve Bank of New York and as Treasury secretary.

By MICHAEL M. PHILLIPS and SUDEEP REDDY
The Wall Street Journal

The extent of their involvement, which wasn’t widely known, raises fresh questions about whether Mr. Geithner could have known earlier about AIG’s $165 million in bonus payments. When the bonuses sparked a political firestorm last week, Mr. Geithner said he learned about their full scope in early March, just days before they were paid.

Mr. Geithner and Federal Reserve Chairman Ben Bernanke will be grilled by Congress on Tuesday in a hearing that is likely to focus heavily on AIG. The flap has prompted lawmakers to seek curbs on an array of bonuses, tested the Obama administration and undermined Mr. Geithner’s standing as he attempts to implement measures to stabilize the financial system.

Treasury officials say the department’s staff kept Mr. Geithner in the dark until March 10. “Secretary Geithner, who has been actively engaged in shaping and executing the president’s broad economic agenda, takes full responsibility for not being aware of these programs” before that date, Treasury spokesman Isaac Baker said Sunday in a written response to questions.

This account of how Mr. Geithner and his aides were apprised of the AIG bonuses was based on interviews with government officials, lawmakers and congressional testimony.

Read the rest:
http://online.wsj.com/article/SB12377
7083390610069.html?mod=article-o
utset-box

VP adviser: AIG bonus tax may go too far

March 22, 2009

Vice President Joe Biden‘s economic adviser warned Sunday that a congressional plan to tax American International Group Inc. executives’ bonuses may go too far in using the tax code as a tool for retribution.

President Barack Obama has not said whether he would veto some version of a House-backed plan to heavily tax the $165 million in bonuses. Biden economist Jared Bernstein said it’s important to look at what version of the proposal comes out of the Senate.

“I think the president would be concerned that this bill may have some problems in going too far — the House bill may go too far in terms of some — some legal issues, constitutional validity, using the tax code to surgically punish a small group,” Bernstein said in a television interview. “That may be a dangerous way to go.”

Democratic and Republican leaders in the Senate also have expressed concern about the plan’s approach to dealing with the AIG bonuses.

American International Group received billions in taxpayer dollars to keep its doors open but still paid employees the bonuses their contracts required. Populist anger led the House to impose a 90 percent tax on bonuses paid this year to companies that needed government bailout money.

Obama and his top advisers called the bonuses outrageous and condemned them. Bernstein said the administration must be focused on the big picture, not just one company.

“What happened at AIG, vis-a-vis these bonuses, is a symptom of a much larger problem,” he said. “And we cannot lose sight of the larger problem, which is stabilizing financial markets,”

Bernstein appeared on ABC’s “This Week.”

Financial Advice, Recovery, Trumped by Obama, Congress, Media, Polls

March 21, 2009

Last week when news came that AIG was paying huge bonuses to employees even after the federal bailout, the president’s two top financial advisors knew what to tell the president.

“Pay the bonuses.  We can’t void a contract.”

That advice came from Larry Summers and Treasury Secretary Tim Geithner: Obama’s top economic advisors.

“Summers is the head dog.  He’s Geithner’s mentor.  Geithner is the protoge.  I don’t know how Obama fires one and keeps the other,” a top man in New York financial circles told us.

So maybe that is why Obama has not yet fired Geithner.

Obama Talks Too Much: Time For Action
(Time to Fire Geithner and Summers Too?)

US President Barack Obama, seen here on January 29, 2009, sits ... 
US President Barack Obama, seen here on January 29, 2009, sits alongside Treasury Secretary Timothy Geithner.  Obama has to get his face out of the same photo with Geithner’s face….

And maybe that is why the stimulus contained a provision to allow the AIG bonuses: Geithner and Summers made sure it was put in.

Dodd would know but hasn’t named names.

Heck: Dodd has a house in Ireland to make his retirement happy and secure.

With the nation in what the president has called a financial “crisis” and even a “catastrophe,” Obama is moving away from his top financial advisors at least on some issues, and sticking close to the advice of White House Chief of Staff Rahm Emanuel and policy advisor David Axelrod.

“Those guys know politics.  They are listening to the Hill and watching the media and the polls.  That’s driving Obama’s policy right now,” a top political analyst told us.

Last year, while still a senator, Obama voted for the bailout for AIG….

Meanwhile, Ben Bernanke is taking heat from media folks.

Bernanke released  more money into the nation’s money supply this week and the price of gold went up while the value of the dollar dropped…..

****************

Dodd under fire in his home state:

Dodd’s decision to move his family to Iowa to campaign for a doomed bid for president, his initial refusal to release documents of his two controversial mortgages with Countrywide, criticism of how he financed a vacation cottage in Ireland, and now his involvement as Senate Banking Committee chairman in the bill that ultimately protected bonuses for executives at insurance giant AIG have all taken their toll.

Read it all:
http://news.yahoo.com/s/ap/2009
0321/ap_on_re_us/aig_outrage_dodd_3

Related:
Wall Street Journal: “Geithner Incapacitated;” President Voices Support

Government To Have Bigger Role in All American Lives; Obama Seeks to Increase Oversight of Executive Pay
Bankers Press Case Against Punitive Tax 

Obama, Geithner, Congress Squandering Confidence Needed For Recovery

Bonus backlash hits Wall Street

American Democracy With Checks and Balances is Broken; Media, Congress Failing

Obama’s Radicalism Is Killing the Stock Market

 Obama Spending, Tax Plans Likely Out The Window As CBO Predicts Much More Debt

Obama: Why Are We Saving Geithner and His Incestuous Relationship With Wall Street?

Finance, one of America’s great industries, being destroyed by Congress during crisis?

For Cuomo, AIG, Financial Crisis Is His Political Moment

 Did Obama White House Fuel AIG Bonus Mess To Enact Tougher Rules With Public Support, “Outrage”?

Government To Have Bigger Role in All American Lives; Obama Seeks to Increase Oversight of Executive Pay

March 21, 2009

The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.

By STEPHEN LABATON
The New York Times
.
The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.

Increasing oversight of executive pay has been under consideration for some time, but the decision was made in recent days as public fury over bonuses has spilled into the regulatory effort.

Related:
Financial Advice, Recovery, Trumped by Obama, Congress, Media, Polls 

Wall Street Journal: “Geithner Incapacitated;” President Voices Support

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 range 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.

One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.

Beyond the pay rules, officials said the regulatory plan is expected to call for 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.

It will propose that many kinds of derivatives and other exotic financial instruments that contributed to the crisis be traded on exchanges or through clearinghouses so they are more transparent and can be more tightly regulated. 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 plan is being put together in advance of the meeting of the Group of 20 industrialized and developing nations in London, an annual event that is expected to be dominated by the global financial crisis and discussions about better oversight of large financial companies whose problems could threaten to undermine international markets.

An important part of the plan still under debate is how to regulate the shadow banking system that Wall Street firms use to package and trade mortgage-backed securities, the so-called toxic assets held by many banks and blamed for the credit crisis.

Officials said the plan would also call for increasing the levels of capital that financial institutions need to hold to absorb possible losses. But in a sign of the fragility of the economic system officials said the administration would emphasize that those heightened standards should not be imposed now because they could discourage more lending. Rather, they would be put in place after the economy began to rebound.

“The argument some are making is that they don’t want to be stepping on the gas pedal and the brake at the same time,” said Morris Goldstein, a senior fellow at the Peterson Institute for International Economics and a former top official at the International Monetary Fund.

Administration officials are also debating how tightly to supervise hedge funds. A broad consensus has emerged among regulators and administration officials that hedge funds must be registered and more closely monitored, probably by the Securities and Exchange Commission. But officials have not decided how much the funds will have to disclose about their investments and trading practices.

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 that are not now regulated by Washington, like insurance companies and hedge funds.

Read the rest:
http://www.nytimes.com/2009/0
3/22/us/politics/22regulate.htm
l?_r=1&hp

NYT:
http://www.nytimes.com/

Bankers Press Case Against Punitive Tax 

Obama, Geithner, Congress Squandering Confidence Needed For Recovery

Bonus backlash hits Wall Street

American Democracy With Checks and Balances is Broken; Media, Congress Failing

Obama’s Radicalism Is Killing the Stock Market

 Obama Spending, Tax Plans Likely Out The Window As CBO Predicts Much More Debt

Obama: Why Are We Saving Geithner and His Incestuous Relationship With Wall Street?

Finance, one of America’s great industries, being destroyed by Congress during crisis?

For Cuomo, AIG, Financial Crisis Is His Political Moment

 Did Obama White House Fuel AIG Bonus Mess To Enact Tougher Rules With Public Support, “Outrage”?

Michelle Malkin:
http://michellemalkin.com/2009/0
3/21/liveblogging-the-lexington
-ky-tea-party/

Obama: Why Are We Saving Geithner and His Incestuous Relationship With Wall Street?

March 21, 2009

“Geithner has an incestuous relationship with Wall Street,” said Jim Bunning, the latest Republican lawmaker to call for his scalp.

“Geithner costs us a week of congressional work lost — all by himself,” a top Democrat told us.

“The whole congress should have their income taxed at 90% because of their incompetence,” said former Arkansas Governor Mike Huchabee today on Fox.

We might get back 90% of Geithner’s pay too, and Obama’s for not stopping the AIG witch hunt in congress — while he was campaigning and sitting with Jay Leno and saying stupid stuff.

I thought we were in a financial and economic crisis?
“What we need today is more optimism and more confidence,” Larry Summers said.

“Consumer confidence is slightly up. The market is slightly up,” Biden said.

“We need confidence to make this recovery work,” President Obama said.

Well, confidence is lost: especially in Geithner.

************************

By Krishna Guha and Edward Luce
FT

….every time Mr Geithner opens his mouth the Dow heads in the opposite direction. Worse, perhaps, Mr Obama has got into the habit of expressing his confidence in Mr Geithner, a sure sign in more normal times that a public figure’s days are numbered.

A former high-flying career civil servant, Mr Geithner’s credentials are widely recognised. He has had extensive international experience, having spent much of his childhood in Asia and Africa. He studied at Dartmouth and Johns Hopkins before joining Treasury in 1988, where he found a mentor in Lawrence Summers, a Treasury official who is now Mr Obama’s senior economic adviser. At Treasury and later as head of the New York Fed, Mr Geithner has dealt with nearly every financial crisis in the past 15 years, including witnessing the start of a decade of stagnation in Japan when he was based in Tokyo.

Timothy F. Geithner illustration

“He is a smart guy,” Mr Obama told Jay Leno, the talk show host, on Thursday in his third defence of Mr Geithner this week. “He is a calm and steady guy and I don’t think people fully appreciate the plate that was handed to him. This guy has not just a banking crisis; he’s got the worst recession since the Great Depression.”

No Treasury secretary has been faced with such a cacophony of crises. In addition to shaping what could turn into a multi-trillion-dollar plan for the financial sector, Mr Geithner is in charge of restructuring the US car industry, overseeing the $787bn economic stimulus, providing relief to millions of struggling homeowners and co-ordinating a global response to the crisis from 20 leading nations.

“Secretary Geithner has taken more concrete actions to repair the financial system in his less than two months in office than others have taken in the course of years,” a Treasury official said.

Moreover, Mr Geithner, who, until recently, looked a youthful 47, is being asked to fight all these fires with a shoestring staff – he remains the only Treasury official confirmed in the job. Given the high ethical bar Mr Obama and Congress have set for nominees, Mr Geithner has struggled to bring in the people he wants. Like Mr Paulson, Mr Geithner relies heavily on informal advisers. However, unlike his predecessor, Mr Geithner’s team are not hand-picked loyalists. “We don’t have time to do preparation for anything – public appearances, testimonies on Capitol Hill, or any of the niceties,” said a Treasury official. “Nobody gets any sleep.”

All the while, Mr Geithner is having to fend off a vituperative campaign for his removal. Some allege he slipped up when he failed to prevent AIG, the bleeding insurance giant, from paying out $165m in bonuses to executives from the more than $170bn it has received in taxpayer funds. Others say Mr Geithner has lost credibility with the markets.

Still others claim that Mr Geithner, whose previous job at the New York Fed put him on the frontline of last year’s Wall Street crises, is too sympathetic to those he is bailing out. “Geithner has an incestuous relationship with Wall Street,” said Jim Bunning, the latest Republican lawmaker to call for his scalp. “Where’s the [bail-out] plan? You know, we still haven’t seen the plan and he’s been in office for six to eight weeks.”

Asked by CNN how he copes with the stress, Mr Geithner said: “I exercise. I talk to my family as much as I can”, but he has far less time now for his hobbies of playing tennis and basketball. Mr Geithner’s defenders say that he is caught up in a maelstrom of public anger for sins he has not committed – with some noting that only Mr Obama has the authority to tame the virulent populist mood in Congress.

But he has also created problems of his own, notably the revelation that he cleared more than $40,000 in tax arrears only after he was nominated. Even friends blanch at this one. “This was not Tim’s best moment,” says a former colleague. “If you’re going to be in charge of the IRS it seems reasonable to expect you would have a clean tax record.”

Mr Geithner survived but only after 34 senators had voted against his confirmation. More serious is his widely derided public speaking manner. Although accomplished at making government bureaucracy work from behind the scenes, Mr Geithner has scant experience in the arts of public persuasion and seems ill at ease in the spotlight.

This is not helped by the fact that he is boyish-looking and lacks authority in his delivery. In his first attempt last month to set out a plan for the financial sector bail-out, Mr Geithner seemed almost shell-shocked. The Dow dropped 400 points while he was speaking. Next week he will try again. But many in the markets, where Mr Geithner is now nicknamed “Tiny Tim”, have written him off. “Tim writes fine words – his speeches look good on paper,” said another former colleague. “But his delivery is bad.”

Mr Geithner’s public touch may improve – and Mr Obama can ill-afford to lose a Treasury secretary within his first 100 days. Moreover, Mr Obama has not always helped his colleague. Last month’s botched bail-out announcement failed in part because Mr Obama had built up such high expectations. This week, Mr Obama left his Treasury secretary scrambling when he instructed him to find a way to claw back AIG bonuses after Mr Geithner had said the administration had no legal means to do so. The suspicion also lingers that Mr Geithner lacks the internal clout to get his way. And there are rumours of differences with Mr Summers, whose intellectual ebullience can overwhelm even the hardiest of colleagues. While Mr Paulson was given a free hand at the White House, Mr Geithner spends much of his time negotiating policy with White House officials.

Ultimately, Mr Geithner’s fate lies in the health of credit markets. He will make a second attempt to unveil the plan to take toxic assets off bank balance sheets. If it passes muster, all else will be forgotten. If it fails, there may be little Mr Obama can do to shield him from Congress, the media and the public.

Read the rest:
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Related:
http://adamsmith.wordpress.com/2
009/03/21/ft-profiles-timothy-geithner/

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