Blog on the Run: Reloaded

Thursday, May 15, 2014 12:18 pm

Stressing the country out; or, Tim Geithner should have been fired about umpty-‘leven years ago

Tim Geithner, the guy President Obama inexplicably put in charge of the bank bailouts, has a new book out called “Stress Test.” (The term derives from the laughably phony “tests” endangered large banks were put through to see whether they had so many crap assets on their books that they needed to be liquidated; the fix was in, so not one large bank was broken apart of liquidated. Instead, we gave them bazillions of taxpayers’ dollars which they spent on bonuses for themselves instead of lending money to businesses to create jobs.)

The consensus seems to be — unsurprisingly, to me — that it sucks. Particularly, it’s incoherent where it’s not downright dishonest. The Washington Center for Equitable Growth rounds up some of the responses:

Glenn Hubbard:

About housing… I must say I split my side in laughter because Tim Geithner personally and actively opposed mortgage refinancing…. And now he’s claiming this would be a great idea…

David Dayen:

The guy who handed hundreds of billions of dollars over to banks with basically no strings attached [was] suddenly worried about fairness when homeowners get a break on their mortgage payments…. Even as he says in the book “I wish we had expanded our housing programs earlier,” he completely contradicts that to Andrew Ross Sorkin, saying [that his own] statement is “unicorny”…

Amir Sufi and Atif Mian:

Multiplying $700 billion by 0.18 gives us a spending boost to the economy in 2009 of $126 billion, which is 1.3% of PCE, 10 times larger than the estimate Secretary Geithner asserted in his book. So Mr. Geithner is off by an order of magnitude…

Economist Brad DeLong concludes:

In the “real world” Geithner did have full control over the GSEs and the FHA–because Paulson nationalized them in the summer of 2008.

In the “real world” Geithner submits his recommendation that Glenn Hubbard be nominated as head of the FHFA to President Obama on January 21, 2009, it is approved by the senate in February 2009, and thereafter there are no constraints on technocratic use of FHFA and the GSEs to rebalance the housing sector and aggregate demand.

Geithner should not say “I wanted the FHFA to act but I did not have the authority to get the FHFA to act” and at the same time say “having the FHFA act would have made no difference”; Geithner should to say “you cannot blame me because of the constraints” when we know that it was his own actions and inactions made those constraints.

Look: Tim Geithner did much better as a 2009-2010 finance minister than any of his peers. Look: the stress tests worked, and worked very well. (I disagree — Lex.) Look: Christina Romer and company say that if you need a bank rescued in 48 hours, Tim Geithner is your man. But the purpose of Stress Test is to explain to us what Tim Geithner thought and why he thought it, and thus why he did what he did.

And in Stress Test, on housing policy, he doesn’t.

Thursday, September 30, 2010 8:34 pm

Somewhere, the ghost of Mark Pittman is smiling

Filed under: I want my money back. — Lex @ 8:34 pm
Tags: , , ,

Pittman, the late reporter for Bloomberg News, died before his efforts to force the Federal Reserve to disclose details of its 2007-09 bailouts succeeded. But the Fed, rather than appealing to the Supremes, says it will disclose that info by Dec. 1.

I imagine that current and former bank CEOs across the country are rapidly arranging flights to non-extraditious climes.

UPDATE: My critics say I never admit when I am wrong. Well, in March I predicted that the Fed would fight this all the way to the Supreme Court. I’m delighted to announce that I was wrong.

Wednesday, June 30, 2010 7:44 pm

Financial-regulation reform?

Eh, not so much.

Wednesday, April 28, 2010 10:45 pm

There’s a word for this: fraud

Filed under: Hold! Them! Accountable!,I want my money back. — Lex @ 10:45 pm
Tags: ,

That auto company you own is claiming it has repaid all its taxpayer-financed bailout money. Not true.

You know, back when the reality-based community ran this country, people went to prison for crap like that.

Thursday, December 31, 2009 2:13 am

Odds and ends for 12/31

Enough already: GMAC wants another $3-4 billion from the taxpayers. Just. Say. No.

Our arrogant national culture is letting our soldiers/marines die unnecessarily: “Indeed, off-the-shelf solutions [to military problems in Iraq and Afghanistan] were there for the asking within Coalition partner states, but no one asked.”

Some good news for a change:Q: Obama says America will go bankrupt if Congress doesn’t pass the health care bill. A: Well, it’s going to go bankrupt if they do pass the health care bill, too, but at least he’s thinking about it.” So we’ve got that going for us.

A question: If the guy accused of being the pants-on-fire would-be terrorist on Flight 253 is “cooperating” with investigators, as investigators say, then why are people calling for him to be tortured?

News flash: U.S. corporate governance sucks, at least at publicly held companies.

Another news flash: Sens. John McCain, R-Ariz., Lindsey Graham, R-S.C., and Joe Lieberman, I-Conn., send the president a letter asking him not to release six Guantanamo detainees to Yemen. Just one problem: too late. A big deal? Of course not. But imagine how this would have been played if three Democratic senators had done this with George W. Bush still in the White House.

The Washington Post’s Steven Pearlstein, unlike McCain, Graham and Lieberman, is NOT too late. Not that it helps: Indeed, he warned us a year ago that Obama’s choice of Mary Schapiro to run the SEC would suck. And it has come to pass as it was foretold.

Well, at least we’re going to have a national election contested on a clear issue: Newt Gingrich has been calling on Republican Congressional candidates in 2010 to pledge to repeal health-care reform (should it finally pass) if elected. Now the White House is double-dog-daring them to do it, too.

How to keep your recently deregulated, greedy, rapacious, out-of-control industry from being intelligently re-regulated: First, get the majority party to assign a bunch of politically vulnerable rookies, who will therefore be desperate for lots and lots of re-election campaign cash, to the committee that oversees you.

Worst financial footnote of the year: By the time this post sees the Interwebz, results should be posted.

Dennis Kucinich may see flying saucers, but he also sees some incredibly bad policy (if not actual crime) and is calling it out.

From the banksters’ own fingers: Some internal AIG e-mails are finally being made public. We need many, many more, and we need many, many people to go through them looking for evidence of crime.

Sigh. More Calvinball*. Better journalists, please.

Newt’s getting predictable.

Memo to Andrew Sullivan: There’s a difference between accountability and kabuki, and John Cole, being smarter than you, explains the difference. Pay attention; this will be on the exam.

*Term explained here.

Tuesday, May 12, 2009 9:11 pm

Shame shortage

Clearly, money ain’t the only thing they’re running low on at AIG:

American International Group Chief Executive Edward Liddy will speak out against criticism of the insurer’s employees on Wednesday and talk about the company’s future plans, the Wall Street Journal said.

Liddy will speak to a U.S. House oversight committee and ask for a better partnership with the government, according to the paper.

“Rampant, unwarranted criticism of AIG serves only to diminish the value of our businesses around the world,” the paper quoted Liddy’s prepared testimony.

Yeah, Ed, that’s exactly the kind of behavior that’s going to wind down all that “rampant, unwarranted criticism.”

Tell you what, Ed. If you’ll undo ruining the economy, throwing millions of people out of work, tanking the stock market, destroying people’s college and retirement savings and contributing greatly to the general financial and human misery arising from the situation in which we now find ourselves, I’ll reconsider some of my “rampant, unwarranted” criticism.

And Condition No. 1 for “a better partnership with the government” is you repay the $170 billion you owe it, jackass. ‘Til then, I don’t want to hear another damn word out of your mouth.

UPDATE: In the comments, Fred reminds me of a quasi-related subject I’d meant to blog about and forgot: Rep. Alan Grayson gives the Fed inspector general a pop quiz, and she flunks. Badly:

(More on Grayson earlier, here.)

Monday, May 11, 2009 8:48 pm

More antitrust enforcement?

Filed under: I want my money back. — Lex @ 8:48 pm

Supposedly, that’s what’s coming.

I am not enough of an economics expert to know what perfect or near-perfect antitrust enforcement should look like, but I can suggest one eminently reasonable standard: If a company is “too big to fail” — that is, if it must be propped up with taxpayer money because allowing it to fail would grievously harm the larger economy — then it is too big, period, and must be broken up.

Wednesday, April 8, 2009 9:46 pm

… and they would deserve it

A couple of posts down, I speculated that Citi may be a takeover target for the Feds. Here’s some evidence that it should be: the apparent, and utter, cluelessness of its new chairman:

Citigroup Inc.‘s new board chairman, Richard Parsons, said financial institutions are being targeted for creating the nation’s financial crisis, but they aren’t the only ones responsible.

“Everybody participated in pumping up this balloon. Now the balloon has deflated,” he said Monday. “Everybody, in reality, has some part of the blame. But it’s much more in the culture to find a villain and vilify the villain.”

Besides banks, there was reduced regulatory oversight, loans to unqualified borrowers were encouraged and people took out mortgages or home-equity loans they couldn’t afford. …

” … to demonize the bankers alone for creating this financial meltdown is both inaccurate and shortsighted.”

Now, it is technically true that all these factors contributed to the now-deflated balloon. But it is also true that the most damage has been done by bank holding companies like Citi and other nonbank (i.e., essentially unregulated) financial institutions, who got themselves way overleveraged and then looked to the taxpayers for a bailout.

And their mistakes weren’t limited to overleveraging themselves: A lot of lenders committed outright fraud.

But here’s my favorite part:

“Any time you have these financial crises, the bad news seems to overwhelm all the good news,” he said. “But within the envelope, Citigroup is still a very powerful, vibrant, highly profitable, good bank.”

That little gem comes after this little bit of the story:

Citigroup has suffered five straight quarters of losses, including $8.29 billion in the fourth quarter alone.

It has received $45 billion in bailout aid, and the government also agreed to cover a portion of losses on hundreds of billions of troubled assets and loans as Citi looks to right itself.

“Vibrant, highly profitable”?? Heck, forget his disingenuous spin. He should be fired because he can’t even count.

Tuesday, April 7, 2009 9:21 pm

AIG and Citi in the government’s crosshairs?

Filed under: I want my money back. — Lex @ 9:21 pm
Tags: , , ,

Could be:

Elizabeth Warren, chief watchdog of America’s $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration’s approach to saving the financial system from collapse.

Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government’s Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be “wiped out”. “It is crucial for these things to happen,” she said. “Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade.” She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

Warren also believes there are “dangers inherent” in the approach taken by treasury secretary Tim Geithner, who she says has offered “open-ended subsidies” to some of the world’s biggest financial institutions without adequately weighing potential pitfalls. “We want to ensure that the treasury gives the public an alternative approach,” she said, adding that she was worried that banks would not recover while they were being fed subsidies. “When are they going to say, enough?” she said.

Relatedly, some circumstantial evidence (very circumstantial, I should caution) that Citi’s days as an independent entity may be numbered.

Monday, April 6, 2009 10:10 pm

Cue the torches and pitchforks …

Filed under: You're doing WHAT with my money?? — Lex @ 10:10 pm
Tags: ,

… and here are only two reasons why.

Thursday, November 13, 2008 8:51 pm

Taking away their keys

For once, I’m with Thomas Friedman: If we’re going to bail out the market-blind, energy-blind, no-innovation-developing U.S. auto industry, we taxpayers need some brutal concessions in return. Indeed, we need some brutal concessions from everyone on the growing list of entities getting a federal bailout. And right now I don’t see anyone looking after the taxpayers’ interests in that regard. (There may be somebody, but I couldn’t tell you who it is.)

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