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The new Treasury Secretary
No, Tim Geithner hasn't been replaced. He just seemed different this week, like maybe the guy testifying to Congress was an imposter wearing a Tim Geithner mask. It is Halloween, you know.
Last spring when he had just started as Treasury Secretary, Tim Geithner came across as timid, uncertain and a little small in front of the TV cameras and on Capitol Hill. Flash forward to his appearance Thursday morning before the House Financial Services Committee and Geithner was hardly recognizable: he interrupted the members, rolled his eyes, shot questions back, spoke over them and even ignored the chairman himself as he pounded the gavel.
What's got into Geithner? The short answer: a deadline. With their energy bill stalled, health care dragging out and other initiatives pushed aside, financial reform is a high priority for an Administration in search of wins. Geithner's bosses at the White House are pushing to get a bill to the President for his signature by the end of the year, and Geithner is the point man in making that happen.
If yesterday was any indication, Geithner's up against it, and maybe that's a good thing. Some members of Congress attacked the Administration's TBTF plan for a lack of transparency. FDIC chairwoman Sheila Bair said regulators weren't getting enough power.
These are valid concerns and should not be skipped over, no matter what the Administration's deadline is. The transparency problem is that the plan would keep the list of Too Big to Fail banks and their health a secret. More about that on today's After the Bell podcast. I'll be talking with Henry Blodget of the Business Insider. He has some alternative ideas for resolving TBTF, like changing capital requirements. Hopefully, Congress will consider those ideas as well. More from Time:
Geithner's biggest advantage is that the politics of reform are on his side, as he told the big bankers last week. Americans aren't much interested in details, but any appearance of moving forward on reform will have support, while those who try to slow the Administration down will appear to be siding with the big banks and Wall Street. That view is supported by a new TIME poll conducted in association with research firm Abt SRBI, which shows that 62% of Americans believe financial reforms need to be toughened.
Uh, I'm interested in details, and I'm guessing you are as well. We're seeing the same problem with health care reform. The attitude is -- just get something passed.
But the Administration's solution to TBTF isn't a fix. It doesn't change anything from last year: The feds would monitor the TBTF banks behind closed doors, telling us only what they think we should know and assuring us that whatever they decide to do is for our own good.
If Geithner's push for a "win" results in that kind of solution, then it'll be a loss for the American people.
The key words: "...any appearance of moving forward on reform will have support,...". Cngress must be careful to avoid reform while appearing otherwise. But the Obama regime is a bit smug, having successfully shifted the gambling debts of the TBTF financial institutions and their unsecured creditors to the rest of us. Moreover, the Fed is still handing Goldman Sachs money at near zero percent which they are using to trade with at 10:1 for their account; Benny decided it was better to shovel money out the back door to America's financial oligarchs than drop it from helicopters to us.
The Obama regime has also succeeded brilliantly in creating a phony fiscal stimulus that goosed GDP to 3.5 percent in Q3 only to saddle us with $800 billion incremental debt. Both these will result in our paying higher taxes, assuming we can find employment.
It's understandable that the Obama Administration is a little anxious about getting some real financial reforms on the books prior to year-end. After all, once the stimulus has run out, there won't be the political will (or the money) to push for a new stimulus and if the financial system is allowed to simply follow the status quo, then all we're likely to see is another financial freefall in 2010-2011 that the Fed won't be able to dig us out of.
The primary goal of the stimulus was to buy us a little time. Time to figure out how to fix the problems with the economy so that we never have to go through this again. Unfortunately, all the stimulus has seemed to buy us is time to ignore the problem and hope it goes away on its own.
