Geithner’s grant of impunity to the elite frauds was unjust and harmed the economy and nation.
The “price” that results from allowing elite frauds to become wealthy with impunity is endemic fraud, recurrent financial crises, grotesque economic inefficiency, and the perversion of markets and democracy through the descent into crony capitalism. Geithner will not bear this “price” – America and Americans will. We were not informed of this price or asked whether we were willing to bear it. There was no legitimate need for us to bear the price because Geithner’s grant of impunity to the elite frauds was unjust and harmed the economy and nation.
“Gresham’s” dynamic: If cheaters prosper, then bad ethics drives good ethics out of the marketplace and fraud can become endemic.
The banksters are the most undeserving recipients of a U.S. government bailout in history. The odds are strong that the banksters will eventually share a portion of the massive bounty they received from the U.S. due to Geithner’s policy recommendations with Geithner. They may hire him, arrange for him to run an international organization, or give him Larry Summers-level (massive) fees for speeches on the wonders of faux “stress tests.” There are numerous ways for a senior government official to cash in.
The banksters are the most undeserving recipients of a U.S. government bailout in history.
No regulator would ever believe that leaving fraudulent CEOs in charge of banks produces economic stability. While Geithner, as President of the FRBNY, was supposed to be one of the nation’s top regulators he, by his own admission, refused to regulate. Like Clinton, Geithner was a strong proponent of the financial regulation that helped to produce (with a huge assist from Bush) the intensely criminogenic environment that caused the crisis. Geithner and Clinton would be two of the last individuals in the world that one would ever select to create an effective program of regulating or prosecuting banksters.
It is amusing that Geithner would choose Clinton as his go-to guy on how to neutralize the public’s outrage at Geithner’s successful effort to convince Obama not to prosecute (or even seriously investigate) the elite criminals who grew wealthy by causing the crisis. First, it’s not exactly a socially desirable expertise for which one wants to be known. Second, Clinton was the subject of the criminal investigations. He was the elite guy that much of the public was demanding be prosecuted. Third, Clinton immediately displayed his contempt for the American people by describing us as eager to murder bank CEOs by slitting their throats in a “dark alley” without any trial.
Obama stands for bailing out the banksters and not prosecuting them.
I am sure that that all Americans will be delighted to learn that Geithner decided that we should bear the price of his recommendation (accepted by Obama) to give the banksters who grew wealthy by causing the crisis de facto immunity from prosecution plus a bailout that would save their jobs and reputations and make them even wealthier. How convenient that the banksters were, as the May 2010 article shows, Obama’s leading contributors (and Geithner’s most likely future employer). Our saying as regulators during the S&L debacle remains true today: “the best return on assets is always a political contribution.” In our day, the political contributions were used to influence politicians who sought to block us from holding the banksters accountable. The author’s effort to render Geithner noble and Clinton sagacious for braving the public’s (fictional) bloodlust in order to protect the noble banksters (aka: contributors) from the murderous public is revealing and comic.
“We estimate that they [the banks] can handle ten million foreclosures, over time… this program [HAMP] will help foam the runway for them.” (Timothy Geithner)
Taking on the banksters would have required the Obama administration to rebuild the vigorous regulatory system essential to prosecute the banksters and prevent future crises. Obama, however, followed the advice of Geithner and Orzag (Obama’s OMB appointee and another leading foe of regulation) and attacked regulation and regulators as the problem. Geithner’s answer to Congressman Ron Paul’s question about his role as the chief regulator of many of the nation’s largest bank holding companies was “I was never a regulator.” So true, but you’re not supposed to admit it. Geithner was a catastrophic failure as a regulator.
Obama followed Geithner’s advice and did not shape Dodd-Frank to target the true causes, particularly accounting control fraud, of the financial crisis. Obama did not appoint vigorous regulatory leaders and he appointed Attorney General Holder, whose failure to prosecute any elite white-collar Wall Street CEO involved in causing the crisis has continued the national disgrace of the Bush administration.
