It's really not Tim Geithner's fault. He's spent all his professional life being an understudy to more powerful men -- from Henry Kissinger to Larry Summers. He is the classic yes man, who can give you all the rationalizations you need to do whatever it is you wanted to do in the first place. So surprise, surprise -- when the time comes to cut a hard deal with Wall Street players, he doesn't have the stomach for the job. Just like Mickey Mouse in Fantasia, he has unleashed forces that he has no idea how to control.
The Nov. 16 report of the special investigator general for the TARP funds (SIGTARP) details chapter and verse. It was requested by several members of Congress who wanted to know why the big firms that had contracts with AIG wound up getting paid full market value for their bad investments, and whether government bailout money was involved. As head of the New York Fed, and thus Mr. Moneybags to Wall Street, Geithner failed to negotiate reduced payments from AIG to its customers (including Goldman Sachs, Merrill Lynch, and several large European banks) in the fall of 2008.
One of the excuses given by Geithner and his team was "the sanctity of contract." You know, the same reason that large bonuses to AIG employees had to be paid with TARP money. It's always hysterical to me when a non-lawyer starts talking about how contracts must be held inviolable under the law. What a joke! Every good lawyer knows that if you have to go to court to enforce a contract, you've already lost. That's why in law, as in many other fields, you don't get what you deserve--you get what you negotiate. Any unemployed person knows this; the person holding the money has all the bargaining power. But Geithner really didn't know how to fight back, unlike Hank Paulson who was the real muscle man as Treasury Secretary. Paulson could knock heads when he wanted, so it's hard for me to believe that Geithner acted all by his lonesome while negotiating the AIG bailout.
If you're giving out haircuts in a financial deal, you need a Big Bubba Bad Ass at the negotiating table representing the U.S. taxpayer. Somebody like Paul Volcker. Can't you see him now, chomping a cigar with his bald head shining and, like LBJ, physically dominating the other players? Or perhaps an Elizabeth Warren, Ms. Transparency with her keen lawyer's insight, who monitors the TARP program for Congress. She'd be sure to ask ask about the Fed creating a dummy corporation named Maiden Lane III to keep transactions with AIG hidden from inquiring minds. A dummy company that sounds like a brassiere manufacturer is a dead give-away.
More at:
http://www.huffingtonpost.com/linda-r-monk-jd/the-sorcerers-apprentice_b_361896.html
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
