When Geithner was Head of the N.Y. Fed:

[amborin]

Has the New York Fed been serving the public trust? Has Geithner?


Thursday, 02/4/2010 by Joshua Rosner

In Geithner’s AIG testimony before the House Oversight Committee, the Secretary again tried to sell the notion that ‘if we didn’t act then, millions more would have lost their jobs and thousands of factories would have closed’. Even if this were true, why did they have to pay these counterparties one hundred cents on the dollar? The answer may be because, as President of the New York Fed, the counterparties you paid out on AIG owned your company.

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Secretary Geithner can keep repeating his assertion he has worked in public service his whole life.

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How does he define working in the public service?

Geithner’s last job, as the President of the New York Fed highlights that question. The NY Fed’s most important ............snip......job is supposed to examine, regulate and oversee the Federal Reserve regulated bank holding companies in the NY Fed’s region, the largest bank holding companies in the country, many of which were AIG’s counterparties.

The New York Fed is not government-owned. Most people fail to recognize this fact. Simply, the Federal Reserve Board (responsible for monetary policy, with a dual mandate of full employment and price stability) is an independent part of the federal government, while the New York Fed is a shareholder-owned or private corporation.

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...... it keeps the details of its shareholders’ ownership information private. What we do know is that its owners include precisely those institutions it is tasked to regulate and supervise .....

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.......the list of the NY Fed’s Board and management group is particularly interesting, reading like a Who’s Who of sell-side financial corporations that the taxpayer has bailed out ......

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......in a previous “public service” role, Geithner was the lead negotiator for the WTO’s General Agreement on Tarrifs and Trade for financial services. In this role, Geithner reported to Larry Summers, who in turn reported to Secretary of Treasury Robert Rubin.

In 1998, this team won the banks EVERYTHING they requested from that treaty. From open access to new markets to unrestricted growth in equity and credit derivatives, they opened the door to rapid and deregulated growth of the large multinational banks, allowing them to become “too big to fail”.

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It appears that his reward for this work was nomination to run the privately owned NY Fed. The nomination was orchestrated by many of those same banks that own the NY Fed and for whom he delivered on that GATT (General Agreement on Tariffs and Trade)

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I expect documents to come to light that will show that Geithner and Summers did the WTO negotiations on behalf of the industry and viewed the completion as a ‘deliverable’ to their financial constituents. How can Obama say, while Summers and Geithner are his team, “if the banks want a fight, I am ready to fight them”?

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http://www.newdeal20.org/?p=8015

[Greyhound]

1. K&R

[unblock]

2. the new york fed is part of the federal reserve system, created by the federal reserve act.

i really have a tough time taking anyone seriously once they try to make a big stink out of the way the federal reserve system is organized. just because the new york fed has shareholders doesn't mean it behaves, or needs to or ought to behave, like a wal-mart or a microsoft or a chase bank.

the new york fed's shareholders do not have the power to shut down business or to merge it with other companies or to spin off divisions or anything like that.

meanwhile, congress created the new york fed and could make it vanish with the stroke of a pen.

bottom line, it's a part of the government and oddly enough, it acts like part of the government.
which is to say, it is at times corruptible.