Full Text: Treasury Secy Timothy Geithner Testimony on Financial System Regulation, House Financial Services Committee
(Source: U.S. Dept. of the Treasury)
Treasury Secretary Tim Geithner Written Testimony House Financial Services Committee Hearing
Introduction
Thank you Chairman Frank, Ranking Member Bachus, and other members of the Committee. I appreciate the opportunity to testify about the critical topic of financial regulatory reform.
Over the past 18 months, we have faced the most severe global financial crisis in generations. Some of the world’s largest financial institutions have failed. Equity and real estate prices have fallen sharply, eroding the value of our savings. The supply of credit has tightened dramatically. Confidence in the overall financial system, in the protections it is supposed to afford for investors and consumers, has eroded. These financial pressures have intensified the recession now underway around the world.
Mr. President, We’re Not All In The Same Boat
I just read the biggest bunch of horse pucky to come out of the Obama marketing machine since all of the false “outrage” over the AIG bonuses.
According to a story on the Reuters business wire tonight, President Barack Obama will meet with bankers on Friday and tell them, “We’re all in the same boat.” His press secretary, Robert Gibbs, explains further:
“The president looks forward to getting an update on what they’re seeing happening in the economy,” Gibbs said on Wednesday of the banking chief executives who are slated to meet with the president later this week.
He said Obama’s message at the meeting would be to say that what is good for Wall Street is good for Main Street.
“We’re all in the same boat,” Gibbs said. “We have to understand that … what is good for one has to be also good for the other.”
This is becoming the schizophrenic presidency. One day we get Obama, hero for the middle class. This Obama campaigns on a middle class tax cut – a true middle class tax cut, not Republican trickle down – and puts it in his budget. The next day, after attacks from Capitol Hill, the middle class tax cut is suddenly a “maybe.” One day we get President Outrage – angry beyond belief at those bloodsuckers on Wall Street for taking advantage of the taxpayer. The next day we get a trillion dollar pledge from the President’s treasury secretary to use more taxpayer money to further front toxic assets.
Today, this is just President Bad PR. Do taxpayers want to hear the President coddling bankers? “We’re all in the same boat?” Give me a break. We’re all in a barrel headed over the Niagra Falls – a barrel the bankers and brokers put us into. So far, in this recession, this financial crisis, the bankers and brokers have been sailing aboard the Queen Mary. I mean, come on — they made all the mistakes and we’re stuck footing the bill.
I know I’m not in the same boat with the suits Obama will speak to on Friday. When they fuck up, Hank Paulson, Timothy Geithner and Ben Bernanke are like the OJ Simpson Dream Team, pulling Wall Street’s chestnuts out of the fire. When you or I fuck up – we’re just fucked.
Transcript: Timothy Geithner Press Briefing – PPIP – Toxic Asset Bailout – March 23
(Source: White House Press Office)
8:56 A.M. EDT
SECRETARY GEITHNER: Thanks for coming. Nice to see you. Obviously we’re announcing this morning the next stage of our broad plan to help repair the financial system. But I want to start by stepping back, putting this in broader context.
Text: Treasury Fact Sheet on PPIP – The Trillion Dollar Plan to Take Banks Off the Hook
The Financial Stability Plan – Progress So Far: Over the past six weeks, the Treasury Department has implemented a series of initiatives as part of its Financial Stability Plan that – alongside the American Recovery and Reinvestment Act – lay the foundations for economic recovery:
- Efforts to Improve Affordability for Responsible Homeowners: Treasury has implemented programs to allow families to save on their mortgage payments by refinancing, assist responsible homeowners in avoiding foreclosure through a loan modification plan, and, alongside the Federal Reserve, help bring mortgage interest rates down to near historic lows. This past month, the 30% increase in mortgage refinancing demonstrated that working families are benefiting from the savings due to these lower rates.
- Consumer and Business Lending Initiative to Unlock Frozen Credit Markets: Treasury and the Federal Reserve are expanding the TALF in conjunction with the Federal Reserve to jumpstart the secondary markets that support consumer and business lending. Last week, Treasury announced its plans to purchase up to $15 billion in securities backed by Small Business Administration loans.
- Capital Assistance Program: Treasury has also launched a new capital program, including a forward-looking capital assessment undertaken by bank supervisors to ensure that banks have the capital they need in the event of a worse-than-expected recession. If banks are confident that they will have sufficient capital to weather a severe economic storm, they are more likely to lend now – making it less likely that a more serious downturn will occur.
Treasury’s Drawing of Their $1 Trillion Plan to Take Banks Off the Hook
With Wall Street Democrats Running the Bank Bailout, Thank God for Paul Krugman
It’s too bad Paul Krugman isn’t the one watching our tax dollars, from his column today in the New York Times:
Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.
This is more than disappointing. In fact, it fills me with a sense of despair.
After all, we’ve just been through the firestorm over the A.I.G. bonuses, during which administration officials claimed that they knew nothing, couldn’t do anything, and anyway it was someone else’s fault. Meanwhile, the administration has failed to quell the public’s doubts about what banks are doing with taxpayer money.
And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.
It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.
Follow the link above and go read the rest. Krugman explains the economics of the issue. Anyone else getting the feeling the Obama Administration – like the Bushies before them – are bending over backwards to not offend the people who brought our economy to its knees?
AIG: The PR Nightmare That Keeps on Giving
Last Weekend Bonus Story, This Weekend AIG Suing the IRS
How many WTF? moments will the American International Group give us by the time the company is once again solvent or is finally taken out behind the barn and put out of its misery?
Last Saturday night, with just enough time to allow the Sunday shows to prepare killer questions for Larry Summers, the AIG bonus story entered the media consciousness. If you’ve been in a cave all week the story goes something like this: Since last September the U.S. government has pumped $170-180 billion into the gaping maw of the world’s largest insurer and biggest loser in the reality show known as the credit default swap market. Uncle Sam now owns 80% of AIG. It was revealed last Saturday that the company has paid $165 million in bonuses to executives and staff of its financial products division. This is the division that has essentially ruined the entire company. The American public is royally pissed off and every politician worth his or her salt is “outraged.”
Government Officials Knew About AIG Bonuses Well Before Last Weekend
This from the New York Times tonight:
Interviews with senior Federal Reserve and Treasury officials, as well as members of Congress, leave little doubt that the bonus program was a disaster hiding in plain sight. Mr. Geithner is not the only one who appears not to have understood the populist fury the bonuses would set off.
Career staff officials at the Treasury, Fed and Federal Reserve Bank of New York exchanged e-mail messages about the A.I.G. bonus program as early as late February, according to a person familiar with the matter. A.I.G. itself revealed the bonus plan in regulatory filings last September.
