Robert Scheer: Geithner and Goldman, Thick as Thieves

[marmar]

from truthdig:




Geithner and Goldman, Thick as Thieves

Posted on May 31, 2011
By Robert Scheer


What was Timothy Geithner thinking back in 2008 when, as president of the New York Fed, he decided to give Goldman Sachs a $30 billion interest-free loan as part of an $80 billion secret float to favored banks? The sordid details of that program were finally made public this week in response to a court order for a Freedom of Information Act release, thanks to a Bloomberg News lawsuit. Sorry, my bad: It wasn’t an interest-free loan; make that .01 percent that Goldman paid to borrow taxpayer money when ordinary folks who missed a few credit card payments in order to finance their mortgages were being slapped with interest rates of more than 25 percent.

One wonders if Barack Obama was fully aware of Geithner’s deceitful performance at the New York Fed when he appointed him treasury secretary in the incoming administration. The president was probably ignorant of this particular giveaway, as were key members of Congress. “I wasn’t aware of this program until now,” Barney Frank, D-Mass., who at the time chaired the House Financial Services Committee, admitted in referring to Geithner’s “single-tranche open-market operations” program. And there was no language in the Dodd-Frank law supposedly reining in the banks that compelled the Fed to reveal the existence of this program.

It was merely one small part of that reckless policy of throwing mad money at the banks while ignoring the plight of homeowners whom the banks had swindled, a plan pursued by both the Bush and the Obama administrations that set the stage for the current slide into a double-dip recession. On Tuesday it was reported that home values have continued an eight-month decline back to their lowest point since the recession began. With housing in deep trouble there can be no rebound of consumer confidence or job creation, and the first-quarter growth rate was an anemic 1.8 percent even as Wall Street profits and bonuses flourished. Wages are stagnant, unemployment claims have recently risen and, as The Wall Street Journal headlined on Tuesday, “Economists Downgrade Prospects for Growth.” That same edition of the Journal reported that 44.6 million Americans now survive on food stamps, an 11 percent increase in that misery index over the past year, while Geithner’s friends at Goldman are doing quite well.

Actually, Goldman wasn’t even a bank and was therefore ineligible for those massive government handouts until Geithner helped gain approval for the instant conversion of Goldman from an investment house to a commercial bank. Goldman was granted that status, and with it access to the Fed’s lending, soon after the privilege had been denied to the fellow investment bank Lehman Brothers (the $30 billion mentioned above was in addition to the $43.5 billion Goldman borrowed from other Fed programs). Although Lehman was allowed to go belly up, Geithner engineered the massive bailout of AIG, a move that turned out to be a cover for passing money to AIG’s clients, including the aforementioned Goldman Sachs. The man’s intentions were clear, even if all the secret details were not, when Obama picked him to be his point man in salvaging an economy that Geithner had done much to wreck. ..............(more)

The complete piece is at: http://www.truthdig.com/report/item/geithner_and_goldman_thick_as_thieves_20110531/

[Jefferson23]

1. He wonders if Obama was fully aware of Geithner's deceitful

performance at the NY Fed?? Come on already.

William K. Black on Geithner: "The Guy Has a Track Record of Failure Everywhere He's Gone"

We recently had James K. Galbraith on our show and since I think he is one of the top economists in the country and he has been critical of the Obama administration bailout plan, I asked him if he could pick one person he would put in charge instead who it would be? He said William K. Black.

So, we just had Professor Black on the show to get his perspective on the bank bailout plan. Remember, he was one of the top regulators who helped to successfully steer us out of the S&L crisis. He is also the author of "The Best Way to Rob a Bank is to Own One."

His analysis of the Geithner bailout plan was devastating. First, you must understand this point he makes - if the banks are not insolvent, why do they need a $2 trillion bailout?

Of course, they're insolvent. That's why we have to put so much money into them in the first place. To claim otherwise, as the entire Obama Treasury Department has, is at best incredibly disingenuous. Prof. Black then goes on to explain that Geithner's plan is "the worst possible strategy" because it is a "fundamental misdiagnosis of the crisis."

You can watch the whole interview here. Here is a slightly shorter version of the interview:

in full: http://www.huffingtonpost.com/cenk-uygur/william-k-black-on-geithn_b_183848.html

[truth2power]

3. Jeebus, Jefferson! I read as far as that sentence and fell off my chair laughing...

"One wonders if Barak Obama was fully aware..." Scheer should be writing satire.

[Jefferson23]

4. This one too made me laugh:

“I wasn’t aware of this program until now,” Barney Frank, D-Mass., who at the time chaired the House Financial Services Committee, admitted in referring to Geithner’s “single-tranche open-market operations” program. And there was no language in the Dodd-Frank law supposedly reining in the banks that compelled the Fed to reveal the existence of this program.

[Demeter]

2. the Wonder is Why Goldman Puts Up With Obama

and I'm not completing that thought because it's too nice a day to be tombstoned.