Reich: Geithner’s “Dithering” & “Incapacity To Speak Clearly” Is “Spooking Everyone” and “Making Things Worse”
EmailABC News’ Matthew Jaffe reports: "Your Treasury Secretary is making things worse" is what former Labor Secretary Robert Reich would tell President Obama if he could. On his blog today – http://robertreich.blogspot.com/ – Reich accused Tim Geithner of "spooking everyone" with his "dithering" and his "incapacity to speak clearly" about what to do to rescue the nation from recession. It was all part of a post in which the Cal-Berkeley professor outlined what he would say to Mr. Obama if he were Paul Volcker, a leading economics adviser who briefed the President in the White House today. "You may not want to hear this, but your Treasury Secretary is making things worse. His dithering on what to do about Wall Street, and his incapacity to speak clearly to the Street and to the public about what needs to be done, is spooking everyone. Why doesn’t he just put the irrevocably insolvent banks into receivership under the FDIC, sell off their assets, protect depositors, and reimburse taxpayers with whatever remains? Let the rest of the banks fend for themselves — working out their bad loans with their creditors. As to AIG, well, that’s a complete basketcase. Put it out of its suffering. Take it over, sell its assets, protect policy holders (you’ll need to create a big co-insurance plan with every other major insurer in the world), then get out." Reich didn’t only sound off on Geithner, but also on the administration’s $787 billion stimulus package. "Mr. President, it’s way too early to know exactly what the stimulus is doing because the money is barely out the door, but I’ve got to tell you I’m worried as hell. Unemployment is at 8 percent, and underemployment is over 14 percent of the workforce. The economy is shrinking much faster than it was when you put the stimulus together. It will be more than a trillion dollars short of its full capacity this year, and I have every reason to believe the same next. State governments alone are hundreds of billions in the hole, creating a huge drag. So your $787 billion over two years, only two-thirds of which is direct spending, isn’t going to get us nearly far enough. I’d strongly recommend you make ready a second stimulus, about the same size, and get it enacted as soon as possible, with the proviso that it will be implemented if and when unemployment hits 8.5 percent or underemployment reaches 15 percent." At the end of the post, Reich – as Volcker – says he’d have one final question for the President: "Want a cigar?" – Matthew Jaffe
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Geithner’s “Dithering” & “Incapacity To Speak Clearly” Is “Spooking Everyone” and “Making Things Worse”
“Mr. President, it’s way too early to know exactly what the stimulus is doing because the money is barely out the door, but I’ve got to tell you I’m worried as hell.
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I agree with Reich.
Posted by: mad | March 13, 2009, 6:49 pm 6:49 pm
Geithner should not get all the blame.
It is Obama’s horrible judgement that should get the blame.
He’s the one that said Geithner was the only one that could do the job. Obama didn’t even care that Geithner was a tax cheat.
And shame on those who voted to confirm Geithner.
Posted by: reese | March 13, 2009, 7:06 pm 7:06 pm
shame on those that voted for Obama!
Posted by: notafan | March 13, 2009, 7:17 pm 7:17 pm
Group diction lessons for Obama and Geithner would be helpful. Or Geithner could take the the lead from Obama and get a teleprompter.
The cigar comment seems like a non sequitur because Obama said he quit smoking a long time ago. Or did he?
Posted by: Sigmonde | March 13, 2009, 7:28 pm 7:28 pm
Why doesn’t he just put the irrevocably insolvent banks into receivership under the FDIC, sell off their assets, protect depositors, and reimburse taxpayers with whatever remains? Let the rest of the banks fend for themselves — working out their bad loans with their creditors. As to AIG, well, that’s a complete basketcase. Put it out of its suffering. Take it over, sell its assets, protect policy holders (, then get out.”
***************************************
He sure makes it sound simple. Too good to be true? Probably is. No dithering though just wrong!
“you’ll need to create a big co-insurance plan with every other major insurer in the world)” then bail them out.
Posted by: Thinking | March 13, 2009, 8:13 pm 8:13 pm
Oh Really?
Since when did promoting a “TAX” cheater to head the Treasury Dept. not become suspect? We; the American people are NOT stupid so stop thinking we are!! WE HAVE YOU ALL IN CLEAR VIEW!!
We are your “BIG BROTHER” and you best know it, bub!!
Posted by: American Infidel | March 13, 2009, 8:33 pm 8:33 pm
The world is really upside down when I find myself agreeing with Reich.
Posted by: Joanne600 | March 13, 2009, 8:41 pm 8:41 pm
haha
does this all matter
no one evern knew who bush’s treasury secretary was until banks started going belly up
the same will be the case for geithner
but maybe I am wrong…. I took a villag idiot and his tres sec to get us where we are now. that used to be a cushy job until the bush administration dorked it up.
Posted by: Omentum | March 13, 2009, 9:55 pm 9:55 pm
Here you see the difference between Clinton and PB0 – the type of people they select to advance our economy.
Posted by: two cats | March 13, 2009, 11:24 pm 11:24 pm
Some of the brightest, smartest people in the room are the ones who are not good at public speaking and drama. They just think, analyze, problem solve, and do the math, so other more gregarious ones can take the stage. I don’t care that Geither is not a terrific public speaker and a celebrity. Let him work behind the scenes. God knows he’s got lots of work to do! I doubt he has the time nor the inclination to come out every day and try to address or to assuage the pathos of the likes of Wall Street and CNBC. What they need is not a Treasury Secretary to hold their hands but a psychiatrist with a couch.
Posted by: TJ | March 13, 2009, 11:25 pm 11:25 pm
I find it laughable that some are commenting that President Obama needs diction lessons. Especially after 8 years of garbled gobbley gook that was indicative, in hind sight, of how he did business.
Posted by: TJ | March 13, 2009, 11:28 pm 11:28 pm
Some of the brightest, smartest people in the room are the ones who are not good at public speaking and drama.
Posted by: TJ | Mar 13, 2009 11:25:00 PM
======
TJ,
The Clueless is the one who makes the most deceptively feel-good speeches, hint hint hint hint ….
Posted by: toto | March 13, 2009, 11:31 pm 11:31 pm
He’s not smart enough to run turbo tax – how in the heck can he run the treasury
Posted by: Joe Blow | March 14, 2009, 12:03 am 12:03 am
Well, did President Obama consult with you, Mr. Reich, about who to choose for the Secretary of the Treasury. I just plain think you wish you could have a place somewhere on his team. Look, the President chose Mr. Geithner to be Secretary of the Treasury and to be his basketball pal too. Give the man some room, there are supposed to be seventeen assistants in that office and as of today there are only three.
One thing for sure is he has the most advice I have even seen given to a new President. Nobody stops to think what they say to him, about him, and just how much needs to learn, etc. Some of those who voted for him are already reeling about all the things he was going to do and their not very happy either. I just pray for the Secretary of the Treasury to get the help he needs.
I actually don’t think President Obama has had enough time in Washington D.C.
You know he wasn’t there as he was campaigning. Now he hasn’t a clue about his Cabinet and other positions that are not are not filled yet. Maybe he should stop talking on TV with his telepromter and start interviewing folks for the unfilled positions.
Posted by: elainekramer | March 14, 2009, 12:19 am 12:19 am
Wow, I took a break from politics after the election. I’m back and the same sore losers from the same horrible previous administration are still around. I’m convinced they spend most of their days thinking about insulting and negative things to say. Get a life. Obama has been in office for 60 days after inheriting a pile of crap. I admire him more today than what he proved during the two year marathon called a campaign. He was the coolest of the bunch and at this stage of the game the smartest of the bunch. What people don’t understand hes a fast study, he has the ability to do more than one thing at a time, a master at multitasking. People criticize him because they are unable to walk and chew at the same time, so they think President Obama cannot as well. Sorry to break it to you, he can and he can do it well. Warren Buffet stated President Obama has an uncanny ability to absorb information from all sides, understand it, study it and come up with a damn good response. This is something most people can’t do so therefore can’t believe Obama can.
He is looking out for us, believe it. Give the guy a break and show some respect, he is our President. That is one thing I’m proud of being that I’m from the old school, I show respect to our President first and if I disagree with a policy he has I’ll voice that but without the drama. I’m not privy to the information nor I’m I capable of understanding all of it. Therefore I approach with caution and I’m not a hypocrite like so many others are.
I get tired of the amateur armchair quarterbacks, they sound like fools.
Posted by: John Shutz | March 14, 2009, 3:35 am 3:35 am
I give thanks to God for one thing. That is King Obama not adding Robert Reich as Labor Secretary. You won’t find much media coverage of his stating “What we don’t want to do is give out all these jobs to white construction workers.”
Posted by: Howard Beale | March 14, 2009, 9:10 am 9:10 am
The PUMA crowd has a new mantra/slogan “tax cheat”. When will the PUMA bots get a life?! Such an unproductive group of 20.
Geithner is da man! Good pick, President Obama!
Posted by: Common Sense | March 14, 2009, 10:28 am 10:28 am
Good man? A tax cheat is a good man?
Obama continues to do everything in the world, including lavish partying at the White House and wooing socialites, but still hasn’t even begun to address what’s broken in the country.
Posted by: drjohn | March 14, 2009, 11:09 am 11:09 am
“Obama has been in office for 60 days after inheriting a pile of crap.”
Where exactly was Obama for the last four years?
On Mars??? Maybe you hadn’t heard, but Obama was in the US Senate FOR THE LAST FOUR YEARS.
GIVE ME A BREAK. This is a stupid line of argument. Obama helped create this mess. Did he ever vote against lareg spending bills any of the last four years?
What did Obama do for banking regulation??
NOTHING!
Posted by: drjohn | March 14, 2009, 11:11 am 11:11 am
whining republicans are joined by a whining republican-to-be (reich).
centrists have no place in the democratic party or american politics as a whole at present and for good reason.
theres no reason to approach the republican party for anything ;it is bankrupt and correctly no one (intelligent) wants ANYTHING to do with ANYTHING republican…and for VERY good reason;
ALL REPUBLICANS DO WELL IS LIE AND STEAL ,AND WE HAVE HAD QUITE ENOUGH OF THAT OVER THE LAST 30 YEARS OR SO ,THANK YOU VERY MUCH!!!
Posted by: James | March 14, 2009, 11:44 am 11:44 am
Mark Steyn:
“This is the biggest generational transfer of wealth in the history of the world. If you’re an 18-year-old middle-class hopeychanger, look at the way your parents and grandparents live: It’s not going to be like that for you. You’re going to have a smaller house, and a smaller car – if not a basement flat and a bus ticket. You didn’t get us into this catastrophe. But you’re going to be stuck with the tab, just like the Germans got stuck with paying reparations for the catastrophe of the First World War. True, the Germans were actually in the war, whereas in the current crisis you guys were just goofing around at school, dozing through Diversity Studies and hoping to ace Anger Management class. But tough. That’s the way it goes.”
Young people voted overwhelmingly for this clown. They will be paying for it for the remainder of their lives. We older folks are truly grateful–we’ll just go on enjoying our comfortable lives, and the youngsters can figure out how they got themselves into this mess twenty and thirty years from now.
Posted by: Fascist Hyena | March 14, 2009, 12:05 pm 12:05 pm
I find the concept of spreading the Wealth around very interesting. I too have nothing, although I am trying to change that. If the messiah takes it all from the wealthy and gives it to us, and I am not talking about the $13 a week, but $1000 a week. Then there will be no poor. And no rich.
The only minor problem is, when there are no rich, who are you going to get a job from? Who will be left for “O” to take the wealth from? You and I will be the wealthy then. – He will take the $1000 a week, Gone will be our miserable jobs. And the US will join the greatest socialist Nation in the (USSR) world on the ash heap of history.
‘O’ will still be the greatest president the world has ever seen, and ever will see.
Posted by: Len | March 14, 2009, 1:11 pm 1:11 pm
I see the banking crisis as a repeat of the Enron affair.
G. W. Bush K. Lay
B. Obama J. Skilling
T. Geithner A. Fastow
Geithner, the Wall St wiz kid, has been asked to build a house of cards to cover up the banks’ collapsed house of cards.
This doesn’t work. Japans’ banks’ books were cooked, they never addressed it and after ten years they still haven’t dug themselves out because their house of cards cancels the effectiveness of fiscal or monetary policy. There is no exit strategy to recover the government’s infusion.
The foundation of the capitalistic free market is accurate accounting records. Americans believe in honesty and believe cheaters should get punished.
It is inevitable that the bank ownerships will change. The government is not tackling the banking problem in the right order. The government should restore the accuracy of banking records first. Then, it would clearly know how much to prop up the banks. With accurate records and government support, trust will be restored to the credit market, the banks can be sold at a better price because new owners don’t have to the discount the unknown and the on-going shape of the market is healthy.
There is an honest approach to solving the banking problem. If you believe in capitalism, you will see that it is the right solution.
The government consolidates all bundled securitized mortgages, uses a task force of Audit firms to re-value them, then re-distributes the actual mortgages back to eligible holders.
The banks will properly show mortgages in their long-term assets instead of current assets when they held the securitized slices (An improper accounting shift to enhance executive bonus’s).
We will end up with a mortgage market true to capitalism.
Detailed explanation.
Securitized mortgages means mortgages were bundled then tranches of the bundle were sold off. Every mortgage is local so this instrument is invalid.
1)Collect all bundled mortgages.
2)Classify the Mortgages
Within each bundle is a list of mortgages.
All the mortgages must be placed on a master list.
This list must be sub-divided in the following order:
Region/city New England, Rust belt, New York, East coast, Florida, Nevada etc
Interest rate Standard prime, escalating interest rates including subprime
Current market value divided by mortgage
Mortgagee income to mortgage amount -ability to repay
Within each region you will be able to determine three categories
Low, medium and high risk.
3)Calculate the write down.
4)Collect all holders of bundled mortgages
5)Pro-rate the write down according the portion of the bundled mortgage holding.
6)Classify holders
Banks allowed to issue Mortgages in US and those not allowed.
7)Re-distribute the gathered mortgages to the banks allowed to issue mortgages in the US.
The US government only has jurisdiction over banks allowed to issue mortgages in
the US. The other holders will get no mortgages, it’s a risk they took. If this is too severe offer silent partner relationships with the banks with title.
The redistribution will have to depend on what the data looks like. Redistribution must be as fair as possible so should be done before a tribunal using a lottery if necessary. Ideally regions would be distributed to a regional bank but markets may have to be tranched among several banks to fairly spread the risk.
The treasury will have to engage external auditors who just completed auditing the bankers books to staff the project and will need information technology assistance.
Credit Default Swaps
Now that we have valued the bundled mortgages, the credit default swaps (CDS) can be valued. The swap issuers wanted to be unregulated, so be it. The government voids all credit default swaps to any purchaser who has received TARP funds. This should provide relief to the financial institutions who issued CDS. If the outstanding payout is still too much, the government declares that under exceptional circumstances (economic distress) the issuers of CDS are not obligated to fully honor payment on an illegitimate financial instrument, the securitized mortgages. So, only a partial payout will be required.
There is no need for a government bailout. This government intervention is doing for the public what an individual citizen cannot do, in the fairest way possible.
We will have restored, as fairly as possible, a mortgage market true to capitalism.
Posted by: wm | March 14, 2009, 1:40 pm 1:40 pm
no don’t see anyone volunteering to help Geithner. lot’s of hate to smear around but no good advice. who wants a treasury job in this economy where everything you do is wrong.
plenty of negative, partisan attacks but no honest attempts at providing solution or constructive criticism.
Geithner has the weight of the world on his shoulders and all most can do is kack him while he’s struggling.
Posted by: Paul Wall | March 14, 2009, 2:20 pm 2:20 pm
Tiny Tim G. — he’s not taking the heat, all that well — sort of a Jumpy McChicken type.
Posted by: DontGet818OnMeNow | March 14, 2009, 2:40 pm 2:40 pm
The Treasury Secretary looks like a deer in the headlights when he tries to articulate any kind of plan for attacking the economic crisis.
So, why is he the Treasury Secretary? Obviously, he is not someone who was put there to formulate policy or even to contribute useful ideas.
Presumably, he was put there to do just what he is doing: appear incompetent. That way he takes the blame for policies put in place by others who do not wish to be seen as responsible for such policies.
Why would the originators of such policies wish to remain anonymous? There are several possibilities: (1) the policies are designed to serve the interests of those who formulated them, or caused them to be formulated; (2) the originators of these policies are, in fact, our enemies.
Posted by: Critical Thinker | March 14, 2009, 3:11 pm 3:11 pm
Why would anyone want to help Geithner when everything he is doing will make this recession longer and deeper? Who wants to be along for that blame?
Posted by: plumber | March 14, 2009, 4:15 pm 4:15 pm
Hey, the Dow Jones has been up the last few days…surely Geithner is the financial genius they said he was!
Interesting to watch these amateurs throw one after another under the bus.
Posted by: RR GOP | March 14, 2009, 9:56 pm 9:56 pm
The problem is not that the Treasury Secretary is inarticulate. The problem is that the market understands all too well what the President and his team want.
They want a Carbon Tax to raise $650 BILLION from they very people (the middle class) they want to help w/$13 per week.
They want to tax successful risk takers who provide jobs by raising the capital gains tax.
They want to take 45% of everything over $3 million, including life insurance and real estate, when you die. That number is pretty easy to hit if you live in NY, CA etc.
They want to spend so much money that our grandchildren will be paying for today’s Democratic pet projects.
They want to borrow money, mostly from China, to pay for all of this. It will suck up private capital and raise interest rates.
They demonize the successful and try to create jealousy, envy and class warfare.
The problem is not that the message is not understood. The problem is the message !
Posted by: Bob the Broker | March 15, 2009, 12:50 am 12:50 am
Any one worthy of giving any sound financial advice would not be so quick as to judge Mr. Geithner, because only a foul can be convinced that a true solution or an out right determination can be made in two weeks.
There is a clear distinction between wanting to hear something reassuring and a solution.
Furthermore, to concur with any scavenger whom is only trying to maximize their popularity by undermining the efforts of what was inherited from the previous administration is unpatriotic, dishonest and hypocritical at its core.
I have stood by for a long time and read or hear from those who think they can always do better while not proposing any viable solution except for a book.
I would have thought by now that the American populous have learned its lesson from people who constantly prey on the fear of others to make a lousy buck or a name for themselves, but from some of those short sited observations I can assure you that we as a people are only one step away from letting some fringe personality convince us to our demise.
Posted by: Prosper Dupin Etienne | March 15, 2009, 12:53 am 12:53 am
Bob the Broker,
/—–
They want to take 45% of everything over $3 million, including life insurance and real estate, when you die. That number is pretty easy to hit if you live in NY, CA etc.
—–/
And then Bush came. That’s when the biggest transfer of wealth from the middle class to the wealthy happened. What was the purpose of taking our wealth if they (the rich) weren’t planning to man up and pay the taxes? Who did they think was going to pay taxes and with what? (Greedy idiots!)
Posted by: Common Sense | March 15, 2009, 7:12 am 7:12 am
Bob the Broker,
/—–
They want to tax successful risk takers who provide jobs by raising the capital gains tax.
—–/
Successful risk takers will provide jobs. The unsuccessful people that can’t figure out how to pay taxes and make a profit will have to move out of the way. It’s called capitalism. Get it?
Posted by: Common Sense | March 15, 2009, 7:14 am 7:14 am
HELP!!!!! I can’t take 4 years of this.
They said Sara Palin was inexperienced. Give me a break!!!!
Posted by: dazey | March 15, 2009, 10:22 am 10:22 am
This would be hysterically funny, if it were not so frightening. After hiring somebody who couldn’t even figure out his own taxes properly, the country is shocked — shocked! — to find out that he is not the irreplaceable savior he was advertised to be. We should be in great shape now, if only he could cast the same spell on the markets that he cast on the idiot politicians who appointed and confirmed him.
Posted by: IAKC | March 15, 2009, 1:06 pm 1:06 pm
Look at Obama’s cabinet…crooks.All of them.Tim G. is a complete nightmare for all of us.Our once great nation is ruined.The bankers own this country, not the politicians and it’s time to start realizing this.They want everything we all have worked so hard for.And their getting it…No, let me rephrase that…TAKING it.
Posted by: Mike | March 15, 2009, 1:09 pm 1:09 pm
Another stimulus plan just as bloated as the last one! Oh my God, that is rich! Hell, why stop there, why not make it even bigger, double, triple, to ensure even greater prosperity? Why not just pass a one sentence bill that says “let´s just double down on the last stimulus that we never read, and passed anyway” Answer, because this flies in the face of basic economic sensibility. If we truly could spend our way to financial and economic good times, big government would have worked just once in all the times it has been tried in the past. It never does, and never has. I too am scared as hell, but let´s not bet the world on spending, borrowing, printing our way out, that is insane no matter who suggests it. Our entire government should be impeached for passing laws too urgently to read them. Obama should have vetoed the bill because no one read it before passing it, that isn´t responsible government, that is the lunatics running the asylum. These are truly scary and dangerous times, and I am frightened for the future of our blessed republic! Remember Liberty!
Posted by: mike lonkouski | March 15, 2009, 2:05 pm 2:05 pm
What you mean Bush was off with his 750 billion dollar bail out last year?
So typical of the Republicans to do everything on the cheap just like the Iraq war and now the economy.
Obama should be given a chance and Reich should stop Spooking Everyone and give Obama a call and help him instead of going through Political Punch.
Posted by: Kevin | March 15, 2009, 2:43 pm 2:43 pm
“ALL REPUBLICANS DO WELL IS LIE AND STEAL ,AND WE HAVE HAD QUITE ENOUGH OF THAT OVER THE LAST 30 YEARS OR SO ,THANK YOU VERY MUCH!!!”
To whomever said the above, shut up. Obama has lied more in his first 50 days than Bush did in eight years. In fact, Bush didn’t lie in the first place. We went to war based on the information at hand and the decision was supported by the majority of Republicans AND Democrats. Obama has been lying since day one. As far as stealing, what the hell do you call his desire to rob the rich and redistribute all of our income?
Posted by: The Loud Talker | March 15, 2009, 4:40 pm 4:40 pm
If deficit spending is so desirable and profitable to the economy we should spend a trillion dollars an hour through the end of time. If $1 of stimulus yields $1.50 of benefit then there is no end to the riches we will all receive.
As Margaret Thatcher once said, the problem with socialism is that you soon run out of other people’s money.
Posted by: n22s | March 15, 2009, 5:20 pm 5:20 pm
Hey – all you Obama lovers out there! Is all of this rancor I am reading the “hope” and “change” that our beloved President promised us? Why, I thought his mere election would undo all of the terrible things that Bush fella’ put upon the American people!
What you Obama-ites don’t get is that you voted for a dismal incompetent who has placed other dismal incompetents with the management of our economy. You Obama lovers and all of your bumper stickers….you voted for him because he made you feel good! Well, here you go! Having fun yet???
Posted by: Mick | March 15, 2009, 6:21 pm 6:21 pm
Just look at what AIG is doing. Those bonuses are an attempt to cash out before they go down the drain. All this money should have been used to protect depositors, policy holders, and SOLVENT institutions. With these protections, well structured receivership could avoid any panic.
Posted by: redondo | March 16, 2009, 3:50 am 3:50 am