What to make of a left-leaning publication of record,  who appears to be unabashedly in the tank for Barack Obama based on the coverage of the respective campaigns, when they go negative on one of Obama’s brightest financial team picks? 

“Where was Geithner in turmoil?”

“President-elect Barack Obama unveiled on Monday an economic team with deep experience handling economic crises. But does the man at the center of this star-studded cast, Timothy Geithner, the nominee for Treasury secretary, have the chops to take the nation in a new financial direction?”

“That is what a number of Wall Street chieftains are quietly asking, even after the stock market surged with relief after his nomination.”

“One reason Obama gave for nominating Geithner was his ‘unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency.’ More important, he suggested, ‘Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today's markets and a clear vision of the steps we must take to revive them.’"

Clearly this is hyperbole as Geithner and all of the others at the Federal Reserve, Treasury, FDIC, Comptroller of the Currency, Office of Thrift Supervision have clearly been part of formulating the current disastrous bailout policy – and it is apparent that it is not working as well as predicted.

White Knight?

“Geithner is clearly a 47-year-old wonder boy.”

“A graduate of Dartmouth, he has a master's degree from the Johns Hopkins School of Advanced International Studies, did a turn with Henry Kissinger's consulting firm, a stint in the Clinton administration and, for the last five years, has been the president of the Federal Reserve Bank of New York.”

We have seen any number of well-credentialed, well-educated and well-connected people in both government and industry who appeared to be geniuses in good times, but abject failures when problems appeared on the horizon or threatened to overtake events. In this case, no amount of Ivy League polish can restore the luster of the brass (not gold) finish on a deeply dented financial system.

Effectively?

“He will effectively lead the team Obama has chosen to mend a crippled economy. That's important because they won't just be debating economic theory they will be making deals Wall Street-style, negotiating billion-dollar bailouts and restructuring entire industries on behalf of their client, the taxpayers.”

You may be a leader, but if the direction is derived by self-interested consensus and is a murky path to an uncertain future – a bold charging leader is as damaging to the economy and an ineffective and weak advocate for the Administration’s policies.

Challenging the record …

As with so much of Obama’s team, media hype often gives way to a very different, and sometimes disturbing, picture of an “operator” skilled in media relations and with a past history of failures that were conveniently overlooked by the media in their rush to anoint “The One.”

“But Geithner's involvement in several ultimately ill-fated efforts to buttress the American financial system is the very reason some Wall Street CEO's — a number of whom spoke on the condition of anonymity for fear of piquing the man who regulates them — question whether he's up to the challenge.”

"' ‘We have only two things to say about Tim Geithner, who we do not know: AIG and Lehman Brothers,’ said Christopher Whalen of Institutional Risk Analytics. ‘Throw in the Bear Stearns/Maiden Lane fiasco for good measure,’ he said, referring to the site of the New York Federal Reserve, where many rescue discussions took place.”

"All of these 'rescues' are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion."

“Ouch.”

" ‘He was in the room at every turn of the crisis,’ said another executive who participated in several such confidential meetings with Geithner. ‘You can look at that both ways.’"

“While Henry Paulson Jr., the current Treasury secretary, has taken a drubbing for the changeable nature of the government's efforts to bolster the financial industry some of which clearly contradicted each other — Geithner has managed, for the most part, to remain unscathed. He's been widely praised as a bright, articulate out-of-the box thinker who is a bailout expert, to the extent anyone can truly be an expert at fast-changing emergencies.”

Blaming AIG on Geithner?

“Behind the scenes, Geithner was the point person for weeks of sleep-deprived Bailout Weekends. It was Geithner, not Paulson, for example, who put together the original rescue plan for the American International Group.”

Piling on …

“And, of course, Geithner also oversaw and regulated an entire industry whose decline has delivered a further blow to an already weakened American economy. Under his watch, some of the biggest institutions that were the responsibility of the New York Fed — Bear Stearns, Lehman Brothers, Merrill Lynch and most recently, Citigroup faltered. While he was one of the first regulators to smartly articulate the potential for an impending disaster, a number of observers question whether he went far enough to stop the calamity.”

Second guessing the Federal Reserve for not imposing sanctions on financial institutions under powers granted to them by the Homeowners Equity Protection Act (HOEPA) when the primary regulators of these financial institutions (OTS, OCC, FDIC, NCUA and the state regulatory agencies) took little or no action is counterproductive. Shoulda, woulda, coulda … ad nauseam.

More blame should accrue to the Securities and Exchange Commission for their lax enforcement of trading rules and their cheerleading for toxic accounting rules which allowed much of the risk of toxic assets to be held in “off balance sheet” accounts which rendered them invisible to the regulators, counterparties, shareholders and others.

“Perhaps what has most people on Wall Street stirring is Geithner's role in the fall of Lehman. At the time of its bankruptcy, he, along with Paulson, appeared to be the most vocal in supporting the government's refusal to bail out the firm, according to people involved in various meetings. With hindsight, many in the financial industry blame a deepening of the global financial crisis on the government's decision to let Lehman crumble.”

Apparently, someone decided to draw a line – and it produced unintended consequences. Or does it just appear that way in hindsight? There is no way to know what the real problems were or are in a secretive Administration or in a private organization (as is both the Federal Reserve and Lehman).

Media games?

“Perhaps not surprisingly, there have been moves afoot in recent weeks by some in the New York Fed and Obama team to put distance between Paulson and Geithner, whose salary was $398,200 last year and who will take a pay cut to $191,300 in his new role.”

Does it strike anybody else as ironic that these allegedly talented individuals are working for less money than most commonplace Street Wizards? But then again, think of it as paying dues to attain a position that will pay off big-time when one leaves government service.

More media games: plausible deniability or more backhand spin?

“These include the suggestion that Geithner was not in league with Paulson over Lehman; that Geithner pressed to save the firm from bankruptcy; that he was a lone voice on the subject and was overruled by Paulson and Ben Bernanke, the Fed chairman, on this issue.”

“The validity of this new claim is hard to verify. The New York Fed declined to comment.”

“Many executives suggest it may be a bit of revisionist history. ‘If that's true, he did a good job of hiding it,’ said one executive who spent the weekend at the New York Federal Reserve the weekend of Lehman's fall.”

Faint praise or subtle condemnation?

“Paulson has only praise for Geithner. ‘I have the highest regard for Tim his judgment and creativity have been critical to designing and implementing the necessary actions we've taken to protect and strengthen our financial system,’ he said.”

“Let's hope he's right.”

This is the type of article which is used to subtly shade the facts and create perceptions. In this Orwellian nightmare where up is down, right is left and they have redefined a tax cut as a reduction in a proposed budget, there is no rational basis for believing what is printed in the New York Times or its international version, the International Herald Tribute – without further analysis. It is a shame that one can no longer believe the nation’s self-described “newspaper of record.”

Not the only one …

From CNSNews …

“President-elect Barack Obama’s nominee for Treasury secretary was an advocate for corporate bailouts, working out loans for Bear Sterns and insurance giant AIG, even before the approval of the $700 billion rescue package that he will be charged with administering if confirmed for the job.

“He also supports expanding the authority of the Federal Reserve over the economy.  
Timothy F. Geithner, Obama’s nominee and the current president of the Federal Reserve Bank of New York, was the architect of the $29 billion Bear Stearns bailout, according to Conde Naste Portfolio, a move that drew fire from both Democrats and Republicans.

“ ‘Obama might as well have re-nominated Hank Paulson again,’ said John Berlau, director of the center for entrepreneurship at the Competitive Enterprise Institute (CEI), a free market think tank. ‘This is not change, but it is going to be more of the same from the second term of the Bush administration.’”

“Berlau was referring to Paulson, who orchestrated the controversial $700 billion Troubled Assets Relief Program (TARP), which passed Congress and was signed by President Bush early last month. Opponents of TARP could cast a skeptical eye on Geithner during Senate confirmation.”

“Berlau believes both Republicans and Democrats in the Senate who find corporate welfare objectionable should oppose the Geithner nomination, which will be debated before the Senate Finance Committee.”

The fine hand of George Soros?

It is currently unknown why a notorious left-wing news organization and a somewhat right-wing news organization would attack Barack Obama’s main choice for Secretary of the Treasury. Unless there is a coordinated attack by the far-left to squelch Obama’s choices of economic advisors and promote those candidates whose ideological underpinnings compel them to take advantage of the current crisis and promote their far-left ideologies such as wealth distribution, higher taxes and larger government.

It seems, at least to me, to be a time when the people of the United States need to be extremely wary that those who ultimately loathe the United States and would do everything to damage her military and economy are weeded out before they are appointed or elected to office. There appears that there may be a malignant fifth column at work within the United States and I am afraid that Joseph McCarthy’s worst fears may be realized. Yes, I know I mentioned the boogeyman that the far-left has spent decades maligning, but in the final analysis, he was right about the problems with governmental infiltration. Perhaps his methods were a bit crude and some of those associated with his office over-zealous, but there were – and still are – spies and enemies among us. Unfortunately, some of them are well-moneyed and can now buy a veneer of respectability and the complicit assistance of lawyers, lobbyists, politicians and elected officials within the judiciary.

intelligence and law enforcement agencies will be reluctant to act as the matter is political rather than criminal.

What can YOU do?

First, take care of yourself, your family and your house.

Second, have faith in the free markets which will ultimately resolve the problem unless the continual interference of the government prolongs the debacle.

Third, realize that the resolution of the financial crisis takes time and does not lend itself to a quick legislative fix. The best that can be accomplished by government is to soften the financial blow to the average citizen and to learn from their past futile actions.

Although it is unlikely to happen, there are a number of dirty politicians which should be immediately removed from congress if not incarcerated for their special interest meddling in the financial affairs of the nation. Others in the Administration should be immediately removed from office as they were incompetent, malfeasant or simply corrupt. Some should be stripped of their ill-gotten gains and the money placed into a restitution fund. And some should go to jail.

And, above all, remember that those who do not wish the United States well are still hard at work – with the ultimate goal of subverting our military and economy for the benefit of those who want to reduce the United States to a third-world nation, rife with internal bickering and suspicions.

-- steve

Quote of the day: “Those who agree with us may not be right, but we admire their astuteness.” -- Cullen Hightower

A reminder from OneCitizenSpeaking.com: a large improvement can result from a small change…

The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. -- Marcus Aurelius

Reference Links:

Where was Geithner in turmoil?|International Herald Tribune/New York Times

Obama’s Treasury Nominee Has History of Advocating Corporate Bailouts