Reich: Geithner’s “Dithering” & “Incapacity To Speak Clearly” Is “Spooking Everyone” and “Making Things Worse”

By Lindsey Ellerson

Mar 13, 2009 6:36pm

ABC 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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