Sunday, February 22, 2009

So Could Tim Geithner Be Any Duller?

I have a friend, a conservative Republican, who works in the financial service field, who wanted Larry Summers and not Geithner. I thought Obama wanted Geithner because Geithner had been in the bailout process under Bush. Well, the reviews are not so good.

Mr. Geithner's Proposal -- A Concept, but Not a Plan -
"Judging by the policy Mr. Geithner unveiled yesterday, the Obama administration does not yet have a definitive resolution. To be sure, in two respects, Mr. Geithner's suggestions represented potential improvement. First, he called for a substantial expansion, underwritten by the Treasury, of the Federal Reserve's Term Asset-Backed Securities Loan Facility, so that it can provide liquidity to the markets for student, auto, consumer and commercial real estate loans. Second, Mr. Geithner proposed a 'stress test' of large banks, which could provide new information as to which of them are undercapitalized and need government support, a merger or -- in the worst cases -- shutting down."

"'You've had now more than a month to work on the proposal,' Sen. Jeff Sessions (R-Ala.) scolded him. 'But what we've heard is more of an outline, short on details, about how we're going to fix this financial system.'

Geithner explained that he would be better able to adapt the bailout to the preferences of Congress and the realities of the marketplace because he has yet to settle on the exact structure of the programs.

'I completely understand the desire for details and commitments, but we're going to do this carefully,' Geithner told the committee. He said that could avoid putting the government in a position that 'requires quick departures and changes in strategy.'"
Broader point about Geithner, Obama, China, and "manipulation" - The Atlantic Business Channel:
"As I argued here recently, China's management of the RMB's value (as opposed to the huffy and hyperbolic term 'manipulation') is one part of the economic snarl that the US, China, Europeans, and others need to contend with. And it could become a more important and more dangerous part, if the Chinese authorities decide for their own reasons that they will try to push the RMB's value back down again, after letting it rise for years. (For details, here.)"
"What I hope he learned this week is how closely Americans are following the economic crisis and how angry they are. Geithner rose to prominence in the financial world at a time when it was assumed that brainiacs were running economic policy in Washington and major financial institutions on Wall Street. What did it matter that no one understood a word Alan Greenspan said? There was no need for regular folks to worry about the details.

To put it mildly: Wrong.

It will be a long, long time before it's acceptable for a Treasury secretary, Federal Reserve chairman, corporate CEO or anyone else who plays a powerful role in the economic life of the country to go up to Capitol Hill and say, essentially, 'Trust us, we've got this.' But by presenting a plan that was all broad outlines and no fine print, that's just what Geithner did."

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