Treasury Secretary Geithner

More Damning Evidence on AIG 100% payout - SEC involved

The New York Times has posted more documentation on then New York Fed Chair, now U.S. Treasury Secretary, Tim Geithner's cover up on the AIG 100% CDS payout, otherwise known as the real screw job.

Documents obtained by The New York Times on Sunday disclose correspondence between the Federal Reserve Bank of New York, A.I.G. and the Securities and Exchange Commission over how to keep elements of the bailout from being publicly disclosed. Among them is a request by the New York Fed to the S.E.C. that essentially would have locked up most of the documents pending a confidentiality review.

Geithner to use "Shame" on Mortgage Companies

This is absolutely ridiculous. Once again the Treasury Secretary uses the press for a huge we're doing something really campaign and then says they will use shame to embarrass those lenders not really helping homeowners.

In August, we got the same claim. See The Politics of Shame for more details on how obviously, from bail outs to bonuses to loan shark credit card tactics, financial institutions have no shame.

The only ones who are being shamed are the Obama administration, in particular Tim Geithner.

“You just wonder, who is representing middle Americans?”

This is a very relevant question asked by Lynn Turner, a former accountant at the SEC. This question is in response to this story: Geithner Aides Reaped Millions Working for Banks, Hedge Funds

Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.

Get that - they don't face Senate confirmation. Geithner's 'kitchen cabinet' comes right from the financial oligarchy:

Losing His Cajones

The man who made his bones about the Great Depression in writing his Princeton thesis is losing his intestinal fortitude. In his paper he summarizes that FDR could have solved the the Great Depression if only they had inflated the currency more.

Today Bernanke back tracks on his own conclusion by stating:

Federal Reserve Chairman Ben S. Bernanke said today that large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.

Even Bill Gross is becoming a skeptic of late telling listeners to diversify away from the U$D before the banks do.

Treasury is OK With "Too Big" Part

I have been reviewing Treasury's Framework for Regulatory Reform and have reviewed several articles about the reforms. In my opinion, something is missing. Some of the proposals offered are good such as increased oversight of the OTC derivatives market or requiring hedge funds over a certain size to register. These proposals should help.

However, no where in the Framework does it say that financial conglomerates were too big and must be made smaller. The proposal for a systemic risk monitor/regulator is troubling because why add another regulatory body to the current web of regulators. What is needed is hard rules, better yet Federal laws, not another regulatory body.

Will Elizabeth Warren become the new Brooksley Born?

In an article published today in The Observer, it is reported that Elizabeth Warren, Chair of the Congressional Oversight Committee of the TARP program, will issue a report this week calling for the ouster of the chief executives of Citigroup, AIG and other institutions which have received government bailout funds.

Additionally, Professor Warren is reportedly also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade."

The article goes further:

Geithner's New TARP Plan - BARF

The Treasury Secretary has issued a new plan (small pdf) for TARP management.

Yglesias believes there is a window in this fact sheet for nationalization of the banks.

What is most amusing is Krugman is calling the plan a Rorschach test.

I heartily agree and wonder if a public relations, marketing master wrote up this plan for one can project what one wants to believe within the text.

But I have a funny feeling investors aren't too hip to projecting their beliefs into a nebulous bullet point page.

Measure Geithner's proposal tomorrow against this: Bury the dead

Tomorrow, Treasury Secretary Geithner is scheduled to unveil his proposals for dealing with the financial crises. I will be measuring the proposals against the solution outlined by Ian Walsh on Friday: How to Perform Triage on the Banks and Stop the Bleeding

Not only is the financial situation  getting worse, but a lot of securities either really have no market (they're hardly ever sold) or the market price is actually below their probable long term value.  If the government is going to take over banks, or insure the securities, or set up a bad bank, they need to know whether they're solvent and how risky the securities they hold are—how likely they are to go bad in the future.  Once they know that, they know how much to pay, which banks to take over and which banks can be saved.