Blog on the Run: Reloaded

Friday, March 27, 2009 9:09 pm

No, Mr. Geithner, this thing is NOT like this other thing


Apparently, Treasury Secretary Tim Geithner has been comparing his plan for bailing out banks to how the Resolution Trust Corp. handled the S&L crisis of the late 1980s.

Attorney Carolyn Betts, who did some of that handling, begs to differ, in a five-point essay. At least four of the five are pretty depressing, so I’m picking one at random:

POINT #2: If non-performing assets are to be sold to private investors, those private investors will only pay the best possible price if they have access to reliable data upon which to base their bids. I talked to a senior partner in a DC-based law firm who knows everything there is to know about what goes on in Washington having to do with mortgages. He said he is unaware of any significant efforts to hire government contractors to undertake the type of loan due diligence, review, data collection and valuation that would have to be done to conduct sales of the “TARP” assets that have been talked about since the fall of last year and earlier.

I talked to a national legal temp firm and asked whether there was any work available in toxic asset review. The recruiter said that her firm had expected to see a lot of that type of work coming down the pike, but there is nothing of that type out there so far. By all accounts, government regulators like FDIC and SEC are short of funds, and FDIC is hiring a lot of bank examiners. If you go on USAJobs and look for job openings with FDIC and the Commodity Futures Trading Commission, there are few or no openings for experts in valuing or otherwise dealing with non-performing loans.

We have been talking about the bursting of the housing bubble for over a year now, and there seems to be no one taking any initiative in categorizing, stress-testing, quantifying, defining, analyzing, valuing or otherwise collecting information to define the problem. And if any of this is going on secretly and behind closed doors in Washington, then shame on them. Real estate is all local. And if we don’t know what the problem is, any proposed solution will fail.

From the taxpayers’ standpoint, I can’t see any way this ends well.

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1 Comment

  1. […] No, Mr. Geithner, This Thing is NOT Like This Other Thing Blog on The Run (27 March 09) […]

    Pingback by Money & Markets - Week of 4.05.09 at The Catherine Austin Fitts Blog — Tuesday, April 7, 2009 9:29 am @ 9:29 am


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