Wikinvest Wire

Geithner doesn't understand it

Friday, January 15, 2010

Here's a fascinating look into how the mind of Treasury Secretary Tim Geithner works. While others have focused on the comments about the AIG bailout, this item at the Business Insider providing a transcript of the objectionable comments, I was more taken by how Geithner doesn't "understand" certain concepts that everyone else does.


The transcript of the AIG-related discussion is below, but it's interesting to note the difference in tone when it comes to the issue he came to talk about - the AIG emails - versus the broader, more important questions posed at the three minute mark.

Since any sign of weakness is likely to be attacked by the financial media, it shouldn't be too surprising that both Fed Chairman Ben Bernanke and Geithner are mounting staunch defenses of their actions in recent years, Geithner going so far as to say it was "absolutely right" to pay 100 cents on the dollar in insurance claims against souring derivatives.
HARWOOD: As you know, you've been asked to testify before Congress about some memos that came out, Congressman Issa released regarding AIG and advice the New York Fed gave to not disclose the full repayments to some counterparties of AIG. Now, I know you've said that you--or your spokesmen have said that you were not involved in those memos. But did you agree with the advice in the memos? Was it sound advice?

Sec. GEITHNER: You know, I haven't looked at those memos, actually. I wasn't involved in that decision. But I do think the Fed--the Fed did disclose all that information subsequently. I think they made the right thing disclosing it. It's important for the American people to see all that information. But you know, John, what this is about is is a deep sense of anger and frustration that the government thought it was necessary to come in and prevent AIG from failing. That was a hugely consequential decision, a very offensive decision to most people. Deeply offensive to me, too. But it was necessary to do. And we did it in a way that I believe was not just least cost to the taxpayer, best deal for the taxpayer, but helped avoid much, much more damage than would have happened without that. If we could have done it differently, we would have done it differently. But this was the best way to do it.

HARWOOD: You still believe it was the right thing to pay counterparties 100 cents for the dollar?

Sec. GEITHNER: Oh, absolutely. Again, the way--this is a tragic failure in the system, and we had no effective legal means to step in and prevent default without doing what you said, helping this firm meet all its legal obligations. That's why at a centerpiece of the president's reform proposals is to give the government the tools to unwind, dismember, break up, sell these institutions without the taxpayer being put in the position of having to absorb their losses. That's the basic--one of the most important reasons why we have to get reform in place. We had no choice at the time other than to do this. And I'm, personally, very confident it was the right thing to do, and we did it in the best way possible for the American people.
You can bet on Geithner's longevity at his current post over at Intrade.

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7 comments:

Anonymous said...

Timmay is a convenient whipping boy. He hasn't done anything that is out of line with the policies or philosophy of the current administration. After all, what worked in Cook County should work for the nation, right?

Ted S. said...

Geithner and Bernanke are out of touch with the real world in their own unique (but equally sad and dangerous) ways.

Steven said...

I think the fact that he doesn't get it is further evidence that he will continue implementing the same screwed up policies he has been using, which means more money printing and more downside risks for the dollar. In my view the U.S. dollar is in a lot of trouble in the long run because the govt is now caught in a position where it cannot withdraw the stimulus or stop the money printing without severely damaging the economy. So one of the few ways for people to protect themselves from this is to keep adding to gold positions when possible. And I recently came across an article titled "Canadian Gold Stocks Rally as Gold Price Opens 2010 Higher" at http://www.goldalert.com/ which discusses the outlook for several gold-related sectors, including many gold mining companies based in Canada that have benefited and stand to continue to benefit from the rise in the price of gold and the Canadian dollar relative to the U.S. dollar.

Anonymous said...

He HAS to get it, but he doesn't want to go against the party line. If he truly doesn't "Understand" what is happening, then he is clueless.

What was so impressive about this guy again?

Anonymous said...

Timmy noted that - we did it in a way that I believe was not just least cost to the taxpayer, best deal for the taxpayer,....

Wouldn't the least cost and the best deal for the taxpayer have been to "LET IT FAIL!" Tax payer cost and benefit $0!

Anonymous said...

he doesn't get it but then NO ONE AT THAT LEVEL GETS IT. HE WILL BE THE FIRST WHIPPING BOY TO HAVE TO LEAVE TO PROTECT THE IGNORANCE OF "THE ONE". THEN BERNEKE,

(AFTER WE HAVE RAMPED UP HIS POWER HE WILL BE REPLACED BY ONE OF OBAMA'S THUGS, THEN THE "SPREAD THE WEALTH - KILL CAPITALISM PARTY WILL REALLY BEGIN)

THE PEOPLE ARE BLAMING THE BANKS AND WALL STREET TODAY, TOMORROW THEY TURN THEIR MAD FACES TO THE GOVERNMENT. REMEMBER CONGRESS IS IN CHARGE OF OVERSIGHT AND THE DEMOCRATS HAVE BEEN IN CHARGE FOR THREE, THREE, THREE YEARS. THEIR IGNORANCE, INCOMPETENCE AND LACK OF DUTY WILL BE AVAILABLE FOR THE WORLD TO SEE.

THIS IS ICELAND GUYS. STRAP IN!

Anonymous said...

Nothing more than Soros' tool. As far as the handler is concerned, less is more.

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