Financial crises caused by "stupidity and greed": Geithner

[No Elephants]

PORTLAND, Oregon | Wed Apr 25, 2012 8:52pm EDT
Financial crises caused by "stupidity and greed": Geithner

(Reuters) - Treasury Secretary Timothy Geithner sought on Wednesday to reassure Americans that the Obama administration was doing what it could to rout out the bad actors from the worst financial crisis since the Great Depression.

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Geithner suggested that holding people accountable for the wreckage caused by the recent housing collapse and the ensuing financial meltdown was not that simple since most crises were not caused by criminal activity.

"Most financial crises are caused by a mix of stupidity and greed and recklessness and risk-taking and hope," said Geithner, who helped tackle the crisis for the Bush administration when he was the head of the New York Federal Reserve and has been urging Europe to act more aggressively to contain its debt problems.

http://www.reuters.com/article/2012/04/26/us-usa-economy-geithner-idUSBRE83P01P20120426

I smell the fragrance of pile upon pile of bs.


Give us a break, willya, Timmeh? The opposite has been documented in investigation after investigation, article after article, book after book.


There was plenty of illegal activity, including securities fraud, from banks who paid loan originators MORE for risky loans than for creditworthy borrowers, to the appraisers who overvalued the houses to justify huge mortgages, to the investment bankers who sold the crap mortgage derivatives without full disclosure of just how lousy the underlying mortgages were, to the lawyers and accountants who colluded in this mess. Oh, and let's not forget the bond raters who gave this crap the highest ratings simply because they did not wish to lose fees by giving low ratings. ("If we don't do it, someone else will.")

Oh, and what was so stupid about making trillions and then getting the federal government to bail you out to boot?

Seems pretty clear who Timmeh REALLY thinks are the stupid people.

[dtexdem]

1. And bit of ideology. But no doubt about the greed part.

But, yeah, the stupidity is what is fostered in the citizenry in defense of the greed.
Not caused by criminal activity? Well, I guess there are two principles at work there: 1) the corporations have been in control of those who write the laws about what is criminal; and 2) the very rich, corporations, and also Republicans, are exempt from criminal statutes, or at least have keep-out-of-jail cards.

[No Elephants]

2. Yes, but even at that, they did break laws.

[No Elephants]

3. According to Frontline, during the bailout, Geithner had the power to

require the banks to take a "haircut" and chose not to do so.

He simply did not want them punished, then or now. And now, he is justifying that decision by claiming (falsely) that they were stupid and broke no laws, both of which are untrue statements.

PBS's Frontline is, this week, airing Part one of "Money, Greed and Wall Street" this week. I just watched some of it and one of the things Frontline mentioned was that, before the bailout of AIG, Geithner had the ability to make the banks agree to take, say, 50% of what AIG owed them and he chose not to do that.

I knew I was smelling bs. I just did not know there was a reason for it at this particular time. Having just seen part of the Frontline piece, I now get it. I doubt the timing of Geithner's attempts to exonerate the banks was a coincidence. Overall, the piece shows how very involved Geithner was and how the decisions for a lot of the things that made us hoi polloi the angriest were his decisions.

His wiki says that he has also been criticized for not making executives take a hit on compensation. At the time, Senator Dodd said that he had provisions about penalizing the executives in the bailout bill, but Geithner asked him to remove them. (I'd forgotten that until just now.)

As far as greed, I can see why he is so empathetic. His wiki says that, during his confirmation hearing, his failure to pay income taxes cane out.

I had forgotten they confirmed him anyway (understandable, maybe, given the dire straits of the economy at the time, that they did not delay confirmation of a new Secretary of Treasury over a little matter like income taxes. Oh, and that failure to pay taxes was while he was rendering services to AIG.

Do I suspect the timing of the airing of the Frontline piece, too? You bet. But the content is consistent with my recollection of the news I was reading at the time regarding Geithner's role, including from Senator Dodd (another piece of work).


Watch the Frontline, if you possibly can.