Tim Geithner

How Could Ye Be So Blind About Subprime?

federalreservebuildingThere is nothing more frightening than when those in charge of the economy miss something that was as plain as the nose on your face. Such was the situation with the Federal Reserve and the subprime mortgage crisis in 2007.   The FOMC met on August 7th and claimed there was not enough evidence of a subprime problem.

Missing the Housing Bubble

oopsThe Federal Reserve released FOMC transcripts from 2006. Yes, 5 years after the fact you too can find out what actually went on in the FOMC meetings.

In a nutshell, the Fed missed the housing bubble and it's impact on the economy.

Tim Geithner expressed confidence that "collateral damage" from housing could be avoided.

Most of the transcripts reveal a frightening embarrassment, especially now Treasury secretary Timothy Geithner praising now debunked former chair Alan Greenspan. Believe it or not the FOMC was worrying about inflation.

Matthew Yglesias points out we haven't seen nothin' yet. Wait until the transcripts are released for 2008 and 2009. Only then will we know the level of Fed foolishness.

Bloomberg's Bail Out Bombshell Du Jour

nuclear bombBloomberg news has served up another bombshell story on the Federal Reserve loans during the 2008-2010 bail outs. Banks made $13 billion off of secret and ultra-cheap loans from the Federal Reserve. Banks lost $21.6 billion during the same time. That's $13 billion of free money in essence.

Literally the Fed committed $$7.77 Trillion to bailing out these banks. This dwarfs the $700 billion TARP bail out. Bloomberg:

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.

Meet Obama's New Council of Economic Advisers Chair, Labor Economist Alan Krueger

Who is Alan Krueger?  More importantly, is anyone in this administration going to propose solid legislation and policies, well thought out in detail, that will actually work to get America back to work?  Bottom line, it looks like the same ole party line and finding anywhere Krueger has crossed it comes up empty.
line in sand

Obama and Geithner - Back to the Future on Corporate Tax Breaks and Derivative Deregulation

Michael Collins
Speculation reigns supreme in your nation's capital. Who is next in line after the bin Laden operation? The bipartisan coalition directing the war on terror forgot one important fact about the security of the United States of America. It doesn't matter who they kill overseas, the assault on almost all citizens continues unabated at home. No one is doing anything to stop it. Only the financial and political elite remain immune. (Image-WikiCommons)

According to the National Bureau of Economic Research, the national economic collapse (aka recession) ended June 2009. That's news to the 55% of the public that believe we're in either a recession or depression (April 2011).

Geithner Hearts China with Tough Love?

Treasury Secretary Timothy Geithner testified today before the Banking, Housing & Urban Affairs Committee. The headlines blaze with a Geithner quote, it is past time for China to move on Yuan re-evaluation, as if some sort of action might actually happen against China and their currency manipulation.

In reading Geithner's hearing testimony, we have this:

We have very significant economic interests in our relationship with China. With over 1.3 billion people and an economy continuing to grow at or near double-digit rates, China is our fastest-growing major overseas market. China’s record of bringing hundreds of millions out of poverty, building a rapidly growing middle class, and now its efforts to encourage growth led by domestic demand, ultimately mean more demand for American goods and services. Increasing opportunities for U.S. firms and workers through expanded trade and investment with China will be an important part of the success of the President’s National Export Initiative and our efforts to support job growth more broadly.

Coated in the Black Tar of Darkness. a War Against Financial Reform Continues

As weak as Financial Reform bills are in the House and Senate, that's not good enough for some. The White House and Legislators want it weaker and are working under the cover of oil disaster to make it so.

UPI is reporting the conference committee has killed derivatives reform. Blanche Lincoln is the one who killed her own amendment, according to the Wall Street Journal. I guess she won her primary so it's back to business as usual.

The latest version would not force banks to spin off their swap desks, but would cordon off the derivatives operations by giving big banks two years to form affiliates to handle the derivatives bets, which are private contracts that hedge against future price changes in various securities.

Unless I'm missing something that is no change at all. SIVs are affiliates, little shell corporations, usually incorporated in the Caymans to hold CDOs and CDSes or other securities. Is there any difference between a Structured Investment Vehicle and this newly coined phrase affiliate? Looks like a duck.....

UPDATE 8 : NEWSFLASH: Geithner nomination and the return of Lawrence Summers?

NBC is reporting that Federal Reserve Bank of New York President, Timothy Geithner has been nominated by President-elect Obama to be the new Treasury Secretary.

As new developments occur, I will update. Below is a brief from Wikipedia about the nominee.

After completing his studies, Geithner worked for Kissinger and Associates in Washington, DC, for three years and then joined the International Affairs division of the US Treasury Department in 1988.

In 1999 he was promoted to Under Secretary of the Treasury for International Affairs and served under Treasury Secretaries Robert Rubin and Lawrence Summers.