A plan of action for Tim Geithner
Allan Sloan is a senior editor-at-large at Fortune
TEXT OF INTERVIEW
Renita Jablonski: The stimulus bill isn't the only thing getting scrutiny by members of the Senate today. Tom Daschle's tax returns will get a closer look, too. The prospective Health and Human Service Secretary went into his confirmation hearings with this news: he reported that he recently filed some amended tax returns reflecting $128,000 in back taxes. Confirmations hearings, tax problems . . . this sounds a little familiar.
Of course, our new Treasury Secretary, Tim Geithner, had his share of tax questions during his confirmation hearings. Allan Sloan from Fortune Magazine joins us now. Allan, let's say you were Mr. Geithner's PR man. What would you tell him right now to make us forget about all of this as we go ahead?
Allan Sloan: I'd say Tim, we've got to go forward. You've got to become the voice of reason and the voice of the people of the United States. And the first thing you ought to do is something dramatic about addressing the problems at Bank of America and Citibank, which have taken between them more than $100 billion of taxpayer money and are still messed up and still flailing around.
Jablonski: So what do you think he should do with those banks?
Sloan: He ought to convert the government's $101 billion of preferred stock in these institutions to common stock -- which the last time I looked, would give the taxpayers three-quarters of Citibank and about 60 percent of Bank of America. He also should do something about the directors.
Jablonski: You're talking about the board members who are bringing in lots of cash for what I guess, in effect, is a part-time job.
Sloan: Right. They're knocking down a minimum of $225,000 at Citi, $240,000 at Bank of America. They have not done a spectacular job. The average family in the United States, which is paying taxes that's paying for all of this, earns a little bit more than $50,000. I mean, you can't take money from people earning $50,000 a year, pay four times as much to people who are doing a bad part-time job. It's just not right.
Jablonski: Have any directors given back their fees? I mean, we've heard of the executives that have, you know, held back on taking their bonuses.
Sloan: I have not heard of any, and I spent the good part of last week chasing both of those institutions around to get someone to tell me if they had done anything. And the answer was, "We have no comment."
Jablonski: The first thing we saw the new Treasury Secretary do is come out and say, you know what, there have to be some more limits on the kind of money these banks are going to be getting from any additional stimulus package. How do you think he's done in his first week?
Sloan: Well again, it's very hard to say. But he's making the right noises. He seems to have the right instincts. And I've seen him in action, when he was at the New York Fed. And he's really, when he's pushed to it, really tough and really mean. And I would not want to be in a dark alley with him, having annoyed him, even though he's not that much bigger than me. I would not want to have to take him on in a knife fight, because I suspect he'd win.
Jablonski: Fortune Magazine's Allan Sloan. Thank you, as always.
Sloan: You're welcome, as always.