Someone call Lassie. Quick.
It was a tough choice, but instead of tuning into Rush Limbaugh’s radio show today I decided to go for the comic relief of the the Senate finance committee meeting that put Treasury Secretary Timothy Geithner on the hot seat, asking questions ranging from why the never-ending bailout of AIG (there is “less risk” to the American economy in bailing them out than letting AIG reap the “consequences” of its actions; “millions of depend on AIG” so in the “government’s judgement” the “effect on confidence” is much “more dramatic” than the “failure of an investment bank”) to questions about the bailout of the auto industry (which were muffled due to Senator Stabenow’s head being stuck firmly in a very inappropriate place).
When pressed about the growing gall of tax-paying Americans watching their money continue to be handed out like candy to those who pay no taxes, our legendary little tax evader made reference to the Obama adminstration’s investigation into closing off-shore bank account loopholes but, like a good little foot soldier, Geithner kept going back to the mantra of the country needing a “comprehensive strategy” to deal with it.
We sure do, Timmy. But as Senator Orrin Hatch pointed out, Geithner was head of the Federal Reserve in New York when Wall Street slipped on its banana peel. Senator Hatch noted that the “economy, while not strong, was moderate” under Bush, and President Obama continually referring to “recent events” doesn’t seem exactly fair when Geithner was “the overseer” during the Bush administration.
Obama may be running, but at this, Geithner was squirming. His response to Senator Hatch was a masterful mix of weasel words. He blamed “systematic failures” and claims (rightfully) that “a lot of things contributed” to the meltdown. But instead of owning his own role in the financial industry cluster, he then went on to say that “the Federal Reserve was not given responsibility for overseeing investment banks, insurance companies”, etc. that were a “critical part of the crisis”. And repeated again that “comprehensive conservative oversight” was needed.
So none of these Wall Street failures during Geithner’s tenure are considered “critical” any more?
March 2008: Investment bank Bear Stearns collapses from losses in subprime mortgage obligations and derivatives transactions; J.P. Morgan Chase buys Bear Stearns in a deal arranged by the Federal Reserve for the dramatically reduced value of $2 a share, with the Federal Reserve guaranteeing J.P. Morgan against $30 billion in Bear Stearns asset losses.
September 2008: Wall Street investment bank Lehman Brothers closes doors in bankruptcy after the U.S. Treasury and Federal Reserve refuse to arrange a merger plan, a bailout or a guarantee program to save the Wall Street giant.
September 2008: The Bank of America buys Wall Street investment bank Merrill Lynch in a $50 billion deal that saves Merrill Lynch from having to declare bankruptcy.
September 2008: The Federal Reserve extends to insurance giant American International Group, or AIG, an $85 billion loan that saves it from going bankrupt from derivatives loses in a massive $441 billion exposure to credit default swaps.
November 2008: Citibank received $45 billion through the Troubled Asset Relief Program, or TARP, plus Treasury Department, Federal Reserve and FDIC guarantees on $306 billion in troubled assets held by the bank.
January 2009: Morgan Stanley takes over Citibank’s Smith Barney investment unit as Citibank unravels the “financial supermarket” conglomerate accumulated when Sandy Weill combined Travelers Insurance, investment bank Smith Barney and Citibank to form Citigroup in the 1990s.
Guess Lassie doesn’t need to bring any rope.