24/7 On Geithner
24/7 Wall Street is out with an interesting comment on Treasury Secretary Geithner. Excerpt with link and commentary to follow:.
The Treasury Secretary Thumbs His Nose At Congress
Tim Geithner, the Secretary of the Treasury, spent some of the early parts of his {new} career {at the Treasury} being attacked by Congress. Legislators were not happy that he could not come up with details about the Administration’s stimulus program and plans to buy bad assets from banks by recruiting shrewd investors from Wall St. and giving them access to taxpayer cash.
Geithner.....has learned his lesson, and he has learned the secrets of dissembling and being reticent on important issues.
Congress will push the issue of public discussion of sensitive government information, but usually only so far. Geither’s brilliance has led him to change the perception of banks from being “too big to fail” into being “too big to be discussed in public.” His most impressive statement at yesterday’s Oversight Panel cross examination was that the “vast majority” of American banks are well-capitalized. He neglected to mention which financial firms are in trouble.....Since Geithner did say that only about $110 billion of the TARP was left in reserve, the water is inching toward the top of the levy. He did not refer to the new IMF data which came out just before his testimony. It said that worldwide banks were facing more severe write-offs. That fact was conveniently left outside the door.....
....What the Secretary avoided in his comments regarding why the banks are not increasing lending is that he has information about bank “stress tests” that Congress does not. Geithner knows that some of the financial firms are not robust. But, it is too dangerous for him to name them into an open microphone. It could cause a panic, and drive the stocks of major banks down and cause depositors unnecessary worry. What he would say is that if some of the banks did not pass their tests, the federal government stands ready to help them if private investors are not. At this point in the history of American financial markets that means that the government will be stuck with the check......Geithner says that he has the money left in the TARP to cover such a contingency......In the Secretary’s eyes, that means the TARP has worked because it has been well-run due to superior government intelligence and judicious use of the money
.....{Geithner has} learned the lesson that transparency only leads to a call for more transparency......What Geithner has found out, most of all, is that he has his interrogators cornered. Each and every one of them knows that the banking system cannot be allowed to fail and that no one is certain how to fix it. Too much criticism could lead to public anxiety about the entire set of programs meant to repair the broken financial and credit markets and suddenly there may be much more to fear than fear itself.
Geithner has finished answering questions. He has gained the leverage to keep secret.
Geithner.....has learned his lesson, and he has learned the secrets of dissembling and being reticent on important issues.
Congress will push the issue of public discussion of sensitive government information, but usually only so far. Geither’s brilliance has led him to change the perception of banks from being “too big to fail” into being “too big to be discussed in public.” His most impressive statement at yesterday’s Oversight Panel cross examination was that the “vast majority” of American banks are well-capitalized. He neglected to mention which financial firms are in trouble.....Since Geithner did say that only about $110 billion of the TARP was left in reserve, the water is inching toward the top of the levy. He did not refer to the new IMF data which came out just before his testimony. It said that worldwide banks were facing more severe write-offs. That fact was conveniently left outside the door.....
....What the Secretary avoided in his comments regarding why the banks are not increasing lending is that he has information about bank “stress tests” that Congress does not. Geithner knows that some of the financial firms are not robust. But, it is too dangerous for him to name them into an open microphone. It could cause a panic, and drive the stocks of major banks down and cause depositors unnecessary worry. What he would say is that if some of the banks did not pass their tests, the federal government stands ready to help them if private investors are not. At this point in the history of American financial markets that means that the government will be stuck with the check......Geithner says that he has the money left in the TARP to cover such a contingency......In the Secretary’s eyes, that means the TARP has worked because it has been well-run due to superior government intelligence and judicious use of the money
.....{Geithner has} learned the lesson that transparency only leads to a call for more transparency......What Geithner has found out, most of all, is that he has his interrogators cornered. Each and every one of them knows that the banking system cannot be allowed to fail and that no one is certain how to fix it. Too much criticism could lead to public anxiety about the entire set of programs meant to repair the broken financial and credit markets and suddenly there may be much more to fear than fear itself.
Geithner has finished answering questions. He has gained the leverage to keep secret.
Link: http://247wallst.com/2009/04/22/the-treasury-secretary-thumbs-his-nose-at-congress/#more-31570
My comments: Geithner got off to a rough start and his speech or rather non speech in early February regarding the bank bailout sent stocks into their final tailspin. Since then he seems to have found his footing. It's a big, complex and expensive job for the country to fix. However I think a strong argument can be made that the early results are positive. Wall Street at this point would probably prefer that both he and the President step away from the limelight on banking and just get on with the job of fixing the system.
posted by CR English at 8:32 AM
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