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Wow, somebody doesn't like Geithner
Yesterday, I mentioned a book coming out next week called "House of Cards." It's about the collapse of Bear Stearns. Another excerpt was published today, and holy mackerel is it nasty. It's a brutal attack on our current Treasury Secretary Tim Geithner by Bear Stearns CEO Jimmy Cayne. A friend of mine who used to work on Wall Street says it captures the old-school Street mentality perfectly: "It's a knife fight."
The excerpt was published today in the Wall Street Journal's Deal Journal. Cayne rages against Geithner for waiting until after Bear was sold for $2 a share to open the discount lending window to the Wall Street banks.
Bear had lobbied the Federal Reserve to do it much earlier. Geithner was head of the New York Fed, but Cayne calls him a "clerk." Here's the least profane excerpt from Cayne's tirade:
I'm a very bad enemy. But certain things really--that bothered me plenty. It's just that for some clerk to make a decision based on what, your own personal feeling about whether or not they're a good credit? Who the f-- asked you?
I'm not pointing this out because it adds much value to the discussion. It just underscores the raw tenacity and frankly, viciousness of some of the people who were running these banks. Some people think the boyish-looking Geithner is, in fact, a lightweight -- remember how his first press conference as Treasury Secretary was received?
But come on. Cayne led his company down the path of destruction by ultra-leveraging. Bear was way deep into mortgage-backed securities. Cayne has no one to blame but himself, and he knows it. Last year, Cayne described the way one of his clients responded to losing $1 billion in the Bear collapse: "He's an adult, not a whiner."
There you go. And what's so awful is that people like Cayne took down so many others who didn't deserve it.
"the boyish-looking Geithner "
He looks just like Arnold Horshack from the old TV show, Welcome Back Kotter. Same hair and haircut, same wrinkled up head, same features, same sorta bewildered look. Not trying to insult the guy especially. Just think he really does resemble a grown up Arnold Horshack!
Hey I don't have anything negative to say yet, about our new Treasary Secretary, however I did point out to my husband last week that I think he looks like an Elfen king, you know from Lord of the Rings. He only needs a quiver and a pack of arrows on his back, and whala!
I've not heard the question asked, but it seems pretty obvious, wasn't Geithner the head bank regulator for a lot of the NYC banks that outsmarted themselves to such a degree that their ability to continue as a going concern, without massive taxpayer intervention, is at risk? Who didn't see 30% to 50% annual home value appreciation, funded by mortgages bundled into securities that were sold and resold to the point they could not possibly deal with hiccups, as posing any kind of risk to our banking system? The coming problems were plain as day to a lot of people. Where was head regulator Geithner? Wasn't his job to forsee such risk and force banks to avoid or mitigate? One more item, if AIG was so massively intertwined with and important to the banks, why was it not regulated by the bank regulators? In this dawning age of transparency the financial media needs to ask these questions, and not stop asking until they are answered.
It is taking a while for these guys to adjust to a new world, in which they aren't the rulers of the universe. The sharp elbows (to say the least) approach Cayne took, himself, didn't do him (or us) any good. Not to mention, he sure sounds like a whiner to me.
I am spit-ten mad right now. I read about this Wall street crap that has been going on right under our noses for so long now.
To hear big wigs like Cayne and others whine and squirm about how there company's got the short end of the stick really is makes me want ship them all off to what is left of Guantanamo Bay and let them experience what it is like to live and be treated like savages they truly are.
Hi Scott:
Not trying to split hairs here but after watching the Frontline episode you recommended I thought Hank Paulson was the deciding factor in forcing the sale of Bears Stearnes at $2.00 a share to make it painful. Likewise, using the moral hazard philosophy he told Fuld, CEO of Lehman Brothers to find a buyer. Fuld did not and Paulson / Bernacke decided to let Lehman go bankrutpt. This exacerbated AIG's problem because they insured Lehman. Now people think letting Lehman go bankrupt is what put the Stock Market in its perpetual nose dive. Personally, I think it's in a nose dive because they are all under the spotlight, Jimmy Cayne amongst them. The whole world is watching and questioning and living with the repurcussions. I think the fear on Wall Street is their way of life is over and being on the other side of the street, I wish to reassure them life isn't so bad without the yachts and Ferrai's.
Keep up the good work, Scott and it was so nice to hear your voice again at 4:50 a.m. on Minnesota Public Radio this morning.
Yes, Mary, Paulson may have been the deciding factor, but apparently, Cayne took out his rage on Geithner. He was the New York guy. The "who" may be immaterial now, but it's still enlightening to read the reactions and get some kind of pulse on where these people were coming from.
