Henry Blodget thinks it is time for Timothy Geithner to go. So far, Geithner's performance has been shockingly unimpressive. It's not as if he's walking into the crisis anew; he's been the head of the New York Fed for years, and dealing with these issues from the very beginning. Yet on the really crucial problem of what to do about the banking system, he's been very nearly silent, going to Congress with a non-plan-plan that terrified the very markets it was supposed to reassure. Blodget also has a point when he says that Geithner has been mysteriously stuck on his original ideas. I would add that he seems mysteriously stuck on them, but not willing to pay the political cost of executing them, which is the worst of both worlds.
On the other hand, though I've so far been underwhelmed by his performance, we can hardly fire him, because who on earth would replace him? The administration's vetting procedure has gotten entirely out of hand. Two candidates for Treasury slots have already withdrawn their candidacy in the face of the delays and Mossad-style interrogation procedures the candidates have to submit to.
The inability to get anyone confirmed has to be laid at the feet not of Geithner, but of Obama. We're in the biggest financial crisis in living memory, and the administration has so far failed to staff treasury because it is unwilling to take any political risk that a nominee will have a tax or a nanny problem.
These problems are simply the hazard of staffing a treasury department, which often involves people who have made enough money to have tax and nanny issues. And without those people, we cannot fix the banking system. The gigantic stimulus package that Obama passed will fall flat on its face, as contracting credit markets absorb the multiplier. That the Obama administration has been conserving political capital for its stimulus package and its budget, rather than its treasury nominees, is a radical misallocation of priorities.
In these circumstances, I find it hard to come down too hard on Geithner for failing to come up with a newer, better plan; he could hardly be expected to do so without any deputies or staff to help.
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What are the chances we can get the senior Republicans and Democrats on the relevant committees, perhaps the chairs and co-chairs, to publicly state that they will not go ballistic over these problems, and will confirm the candidate if these are the only problems?
Greater than zero?
Probably not.
So why waste political capital if the guy can't get confirmed anyway?
In these circumstances, I find it hard to come down too hard on Geithner for failing to come up with a newer, better plan; he could hardly be expected to do so without any deputies or staff to help.
Because obviously what we need are more central planning technocrats to work their magic and "fix" things. I'm certain the plan, then, would have been immensely better.
Let's remember exactly who's going apeshit over every nominee with nanny or tax problems before we blame Obama for making very sure that doesn't happen again.
Volcker would be fine for a year or two.
Part of the problem is that the government is making the argument that a lot of this was caused by greed and business corruption (of which there is certainly some truth, but is an incomplete picture); this has a cascading effect, as investors lose confidence because it's very hard to know who is corrupt, which gets reinforced as the market continues down. And by putting an openly corrupt tax cheat in charge of fixing a problem that the government blames on corruption and greed, there's a disconnect that's hard to get past, especially with the huge amounts of money (and enormous debts) that the government is spending. If the guy had come in with some brilliant plan it might have been possible to get beyond this, but that ship has sailed.
This raises another question: Whether at this point they can attract any decent talent, considering the irresponsibility of Obama's economic policies. Would Wall Street trust anyone in this position who would agree to the enormous non-stimulative spending that the administration is proposing?
God knows it is very, very difficult to find honest people to appoint to government posts.
If you aren't upset over putting tax cheats in charge of taxes, what does upset you?
I refuse to believe there are no honest and competent Democrats that President Obama could nominate if he wanted to.
"because who on earth would replace him?"
Who would want to replace him right now?????
I never thought he was a good pick in the first place, he was head of the New York Fed, right at the heart of the problem, and was apparently oblivious to the risks of credit default swaps, over leveraging and all the rest of it.
For what reason, then, would anyone think that this person who never saw any of these problems coming would ever come up with a reasonable plan that wasn't a give away to the very set that caused the problem?
However, scape goating him isn't going to fix the problem. Obviously, Obama has bought into his plan, so if there is any blame, it should go to Obama, for appointing him, for letting him languish without staff and for approving a bad plan in the first place.
Mossad-style interrogation procedures?
Well, with a leader like Geithner, it's entirely understandable that an administration might want to probe a little before rushing any more appointments.
I'm delighted to see revealed the sloppiness of our revolving-door political class.
The messiah just put health care---*health care*---ahead of the economy. Rahm let it slip---this is about not wasting an opportunity to slide into socialism. Obama wants the economy to fail---he just put the economy behind healthcare, for crying out loud! And he did so out in the open!
Geithner is the perfect cipher, because Obama isn't going to diddly squat to help the economy!
Wake up people!
Wait, it's somehow Obama's fault that the media and the GOP harp on nannies and tax evasions? The GOP should call a political timeout on Treasury nominees and let the Administration walk back on some of its well-intentioned vetting standards. I still think their proscription of future lobbying employment is a good, nay crucial, rule, but it's become clear that shutting out past lobbyists just disenfranchises too much talent from political appointments.
Megan,
You are eliding the reason why Obama is so gun-shy about tax issues now: because he wasted so much political and ethical capital on getting Geithner confirmed, who, as your colleague James Fallows essentially pointed out, was guilty of more than a mere oversight or mistake in substantially underpaying his taxes.
There's also the possibility that liberals are less inclined to pay their taxes, in which case Obama might want to consider a well-respected moderate or conservative candidate for Treasury Secretary.
Even better, give the job to Volcker, who allegedly has been getting boxed out of economic discussions by Larry Summers. Obama could make Summers Volcker's deputy, to avoid the problem of having too many chiefs and not enough Indians.
Is it really too much to ask that the Secretary of Treasury, in charge of the IRS, is NOT a confirmed tax cheat? Have our standards sunk so low that we should accept the Dept. of Treasury being staffed by people with a history of skirting financial laws?
I would observe that if it is this difficult to find qualified people to staff senior Treasury department positions who have not flagrantly disregarded our tax and labor laws then there is clearly a serious problem with either those laws or the society that creates an elite completely unbeholden to the law.
Or both.
Volker seems to be the obvious choice. He has gravitas, and I would assume his personal life is above reproach. And , who would have a better resume?
Ya know, now it makes sense why liberals are in favor of higher taxes, even if they are wealthy. Because the majority of them cheat on their taxes, the only people getting soaked are non-liberals who obey the law.
Geinther is a tax cheat. he should have been fired. Maybe no one with the basic academic/experience cred wants to work for Obama, seeing as he;s a socialist and all. Kinda anti-economic right there.
Kabayashi, please tell me this was sarcastic:
"The GOP should call a political timeout on Treasury nominees and let the Administration walk back on some of its well-intentioned vetting standards. "
---wait, wait wait. Obama appoints tax cheats to the treasury, and somehow we should let this slide??????
Considering that Tim Geithner has committed multiple counts of felony tax evasion, he not only should be fired from his job at the Treasury, he should be investigated by a grand jury and arrested.
Mr. Geithner is a thief. He does not belong in public office, he belongs in a jail cell.
Anything that slows down the administration from further blundering is probably a good thing. How about just closing the treasury, or better yet- send Geinther to oversee the actual minting of currency. Something he might be marginally qualified to do. Just be sure to check his pockets on his way out every day.
"These problems are simply the hazard of staffing a treasury department, which often involves people who have made enough money to have tax and nanny issues."
There are two ways you can look at this problem. The one the administration is assuming, is that the problem is caused by greed, corruption, cheating, etc. If this view is correct, then of course you want to make sure that the people in charge of the economy are not greedy and corrupt. Those are the people who are going to weed out the greed and corruption out of our economy after all. And of course that scares the crap out of anyone in a position to do anything, because they might be found corrupt as well, or at the very least greedy.
On the other hand, you can say that the tax code is so complex and unwieldy, that it is impossible to be in full compliance, if you engage in any, even somewhat complicated, financial dealings. Judging by the paragraph I quoted, I think that is what Megan believes. If this is the case, then appointing someone with tax problems is not that big of a deal, but you have to say that it is a systematic problems the caused this crises, not corruption and greed, and promise to not aggressively root for scapegoats among the financial world, which will no doubt reassure the markets a great deal.
Right, I can't attack Geithner too much, he's all by himself up there and that has to do with the administration's anti-lobbying clauses. Personally, I think Rouse and Goolsbee should just step down from the CEA and head to treasury where they're more needed. Of course, the republicans will probably stall them as they are currently doing to them right now.
What makes you think Geithner is *supposed* to do anything? The White House is in charge all the way of policy. They *like* the current crisis, it gives them opportunities, and they've said so all along. Their focus is to reengineer the social system, and the economic crisis is a useful screen. In the eyes of the White House, Geithner is perfect -- he's just a foil, and by not doing anything much, he's doing a perfect job. He diverts attention, and he keeps the crisis going. Meanwhile, the engineers are working away in the West Wing, away from scrutiny, remaking the American scene. After all, it's only rich people getting hurt, so where's the problem here? They don't vote Obama anyway, right?
"On the other hand, you can say that the tax code is so complex and unwieldy, that it is impossible to be in full compliance, if you engage in any, even somewhat complicated, financial dealings."
That is clearly the case. But these are the same people that WROTE the complex, unwieldy tax codes. Hence they don't get a pass.
"If this is the case, then appointing someone with tax problems is not that big of a deal"
That the law is complex is no defense for breaking it. If you give this guy a pass, don't you have to give everyone a pass? That's the problem. Talk about equal protection...
I agree, he should know exactly how to handle this crisis. I disagree as to WHY he isn't dealing with it. He is being muzzeled until Obama is finished capitalizing on the crisis. When this country is Socialized to Obama's satisfaction, Tiny Tim will get the green light. That is if there is anything left!
Remember when all those talk radio people were dismissed for bringing up Obama's leftist mentors, by mainstream media people who claimed that "everyone knows" Obama is a moderate? It looks like the talkers were right. Obama is way to the left of the American mainstream.
"I find it hard to come down too hard on Geithner for failing to come up with a newer, better plan; he could hardly be expected to do so without any deputies or staff to help."
Which suggests he might not be ready to nationalize a trillion dollar bank?
Why hasn't everyone taken the obvious lessons out of all these tax problems: tax laws need dramatic simplification. The congressthings excoriating Geithner et al are the people responsible for *that* mess.
Hell, I could stomach a tax cheat with his own internal integrity; upon taking office, proclaiming the titanic U.S. tax code to be an economic and moral monstrosity which he would work feverishly to flatten and simplify. It's a lot harder to stomach a tax cheat who yaps to a bunch of Senators, many of whom that don't have any integrity on the issue themsleves, about the priority of enforcing the U.S. tax code. You cannot make this stuff up.
Maybe there is no one in the current political/economic ruling class that should get the job. Maybe the ones who created the mess should be automatically disqualified to suggest a solution.
Of course, the people recruiting are talking to their kind, and won't have any success unless the choose someone who hasn't done anything and has no skills except making people feel good.
Hmm. There is a parable in that somewhere.
Derek
While I agree that Obama's vision of America is pretty socialist in nature, I'm not sure it is believable that they are letting the market tank on purpose. It seems to me that they are using a lot of tactics from previous busts that don't take into account the specifics of this particular bust and that they don't have much of a strategic grasp of what they are doing to begin with. Though it is hard to understand why they aren't being more aggressive in terms of the banking crisis, since that is the root of the problem, and until that is satisfactorily addressed, nothing is going to change.
Destruction in order to rebuild.
Maybe they are deliberately doing this.
But of course, serious people can't talk like that. Because actually accessing the facts would be unserious about our problems.
It may not matter. If:
(1) Obama/Pelosi/Reid are only fools, and don't really understand what they are doing (the long list of very bad policy ideas - energy tax, higher tax rates, nationalized health care, card check unionization, etc). In that case, negative feedback may lead to learning and better behaviour. Its even possible some adults may show up. Maybe even in time.
(2) They do understand, and it is intentional malfeasance - they are tanking the economy on purpose, to exploit the crisis for political ends. They almost certainly decided not to "waste" the recession they inherited. It was initially hard to believe destroying the economy is really intentional, but the evidence mounts by the day.
If its (1), having the best Treasury Sec is important. Geinther doesn't seem to be getting the job done (i.e., getting the financial system of of intensive care as quickly and cheaply as possible). But its not clear an ideal candidate would be given the political capital to fix the problems. (For example, one of the first steps should be to get rid of Barney Frank - persons the single person most responsible for the housing crisis.)
@mark
"That the law is complex is no defense for breaking it. If you give this guy a pass, don't you have to give everyone a pass? That's the problem. Talk about equal protection..."
But based on your assumptions, it is a perfectly reasonably defense. "I would like to follow the laws, but I cannot understand them to make sure that I am, and cannot hire anyone who can ensure my compliance"
And IF that is the case, then you are right, everyone should get a pass, until the system is reformed to something manageable.
Listen, I HATE the U.S. tax code, but let's be honest. If, as I read, it is true that Geitner, in preparing his own returns, and, among other things, he treated the cost of his kid's overnight summer camp as a deductible child care expense, he isn't guilty of misinterpreting a complex tax code. He tried to slide one by for a few extra bucks. He's part of a large crowd, of course, but few in that crowd behaved as he did yesterday.
"...it is unwilling to take any political risk that a nominee will have a tax or a nanny problem."
And who made that bed? Pity they have to now lie in it.
"...the tax code is so complex and unwieldy, that it is impossible to be in full compliance."
And who made that bed? Pity they have to now lie in it.
For those who think Geithner's non-payment of his self-employment taxes was due to the frightening complexity of the tax code, read what James Fallows had to say about that:
So, the Democrats have large majorities in the Senate and the House and control the White House but...
Those nefarious Republicans keep foiling their plans!
Give me a break.
"These problems are simply the hazard of staffing a treasury department, which often involves people who have made enough money to have tax and nanny issues."
Great, I'll make Obama a deal. Propose a tax simplification plan, right now, that makes it so the rest of us don't have to worry about the kind of picky details that have been screwing up some of his nominees, and we'll talk about letting his nominees skate.\
Until then, I don't remember Bush having this many problems. Is it just that Republicans are more honest that Democrats?
"Is it just that Republicans are more honest that Democrats?"
Seriously? Does everyone forget that McCain admitted to filed false tax returns that did not relfect gifts received from Keating? Or that he made a "donation" to the Treasury to make up for this?
David, really now, how can you expect a mere Treasury Secretary/Fed Governor to follow the rules that strippers and truck drivers manage? Taxes are hard!
"And IF that is the case, then you are right, everyone should get a pass, until the system is reformed to something manageable."
I'd go along with that. IF that were on the table. But the Dems aren't making a peep along those lines (inevitably, because it gives everyone a green light to cheat as much as possible). Nor do i hear calls for reform... that might imply having to read what they've been voting on and we all know how Congress feels about that.
But here's a better question- if the tax code is too complicated to follow for this guy, how in god's name will he be able manage the command economy they intend to forge? I mean, whats the storyline here, "Look, sorry folks. 1040s have lots of numbers and things to worry about, its tough to figure out. Just let me get down to the business of nationalizing the US banking sector."
Ahem.
I thought the Obama Administration represented 'change we can believe in'...in other words they were going to be better, more honest, more transparent, more competant than the Republicans.
At this juncture, "McCain did it too" rings pretty hollow.
I reject the notion that Geithner, or any other individual, or any group of individuals — however smart, knowledgeable, and experienced — can
solve the crisis in banking.
The knowledge necessary for doing so exists only in a market, and it is dispersed among the millions of individuals who participate in that market by buying and selling.
The knowledge is embodied in the prices of things and in the changes in those prices, which guide the decisions of buying and selling and coordinate productive, economic activities.
The economists Ludwig von Mises and Friedrich von Hayek wrote about these ideas, and helped to develop them.
So, whether or not a bureaucrat like Mr. Geithner can hire a few more bureaucrats to help him out, he will fail utterly at his task.
One contribution that is in fact within his power to make at Treasury would be to pay his own taxes.
"On the other hand, you can say that the tax code is so complex and unwieldy, that it is impossible to be in full compliance, if you engage in any, even somewhat complicated, financial dealings."
The complexity of the tax code has nothing to do with Geithner's blatant cheating. For 4 years in a row, he applied for the money to cover the taxes, and each of those 4 years he signed papers saying that he understood why he was getting the money and that he would actually pay the taxes in question. Later, when he was audited, it was again made clear to him that he had failed to pay taxes for 4 years, but since the statute of limitations had run out on 2 of the 4 years, he only paid those he was forced to.
You can't have it both ways - either he deliberately, blatantly cheated, or else he's far too mentally deficient to hold any job at all.
Daschle's mistake might have been an honest one, but not Geithner's. And it's silly to say that only Republicans go after people for these issues, when Linda Chavez was kept out of office because she had been generous enough to let a woman stay in her home for free, and it was learned that the woman had, in turn, washed the dishes now and then.
Chris @ 2:50: You don't provide a source; the best I could find said this:
(1) So, do you know something Bloomberg doesn't, or are you just converting White House talking points into "fact"?
(2) Those cute games the Democratic Congress played against Bush don't look so clever now, do they?
To everyone commenting on the tax code's complexity: True, but irrelevant to Geithner's situation. Not only was the applicable rule very simple and widely known, his employer explicitly points it out to all its US employees every year before tax-time. So, no, he knew and he cheated.
These problems are simply the hazard of staffing a treasury department, which often involves people who have made enough money to have tax and nanny issues.
Honestly, how hard can it be? Clinton and Bush II both managed it without any problems that I know of. It might be the case that, because of the sheer incompetence Obama's team has displayed in vetting its higher profile nominees, lower level administration officials with tax and nanny problems are going to be bigger news than they would have for the rather more organised Clinton or Bush II transition teams. Indeed, it seems quaint, now, to remember that Clinton's transition was supposed to have been a mess.
But still. It can't be that hard.
Mark, thanks for a very good laugh on a grim Friday afternoon.
How about just closing the treasury, or better yet- send Geinther to oversee the actual minting of currency. Something he might be marginally qualified to do. Just be sure to check his pockets on his way out every day.
Check his socks too. If Sandy Berger can think of it, so can Tim Geithner.
Re: wiredog:
So why waste political capital if the guy can't get confirmed anyway?
Er, because the economy is probably the single more important issue facing the government at the moment, and Obama is making Geithner face it with no subordinates to help him out?
Indeed, I think the chances that Congress could be persuaded to let people with tax problems through are probably higher at this point than they have been at any time in the past. We are no longer anywhere near "Caesar's wife" territory, and if the transition team is trying to make up for their incompetence by putting the screws on the junior nominees, it's a lost cause.
Furthermore, the argument that was made for Geithner -- that we need someone uniquely qualified in that position -- can be made with equal force for his subordinates, now that we've seen how ineffective the Treasury bureaucracy is with its entire senior layer of officials emptied out. Heck, not even someone qualified -- we need someone.
I hear Bob Rubin's going to be free soon, after stepping down from his sinecure at Citigroup. Maybe Obama could put him in as Treasury Secretary again?
That's pretty good, too, kwo. I had a client once who went to school with Sandy Berger. She, an ardent Democrat, told me, before Berger's socks adventure, she considered buying weapons and ammunition for the first time when he was named National Security Advisor, since she wouldn't have considered him qualified to clean her office. I'm starting to think he'd be a good fit with this crowd.
"Let's remember exactly who's going apeshit over every nominee with nanny or tax problems..."
I know, it's the Republicans fault....by identifying tax cheat and crooks they are bringing down the economy...the Democrats just don't have anybody honest enough for the positions so we should just give everyone a pass to save the economy...
This was exactly the way the Democrats acted the 8 years Bush was in office, remember, so cooperative and ready to compromise for the good of the American people. Why couldn't Republicans learn from that wonderful display of bi-partisanship?
Geithner being a tax cheat is secondary, if his plan was working or looked like it might work, then I wouldn't mind that he's a tax cheat.
However, it doesn't look as if his plan is working, or even necessarily that anyone is actually implementing it, and that is the problem.
I agree though that if he is too stupid to not have known he was supposed to pay taxes on his income then he isn't qualified for any policy position at Treasury.
So you think it's bad now? Wait until B. H. O. gets seriously upset about something or other and starts calling for riots in the inner cities to support his position. Don't believe it will come to that? I hope you're right...
I think Obama should nominate a Republican for the treasury. If he fails he can keep blaming Republicans. If he succeeds Obamas gets the credit for a great pick and bi-partisanship. Win-Win
"Mossad-style interrogation..."?
Please, these folks have all been two-bit cheats and political, do-nothing hacks. Not a single one of them has faced so much as a tough grilling from a network skirt or SNAG. We're all in big trouble.
But I thought Obama was great. Historic. A healer. The One. The man who could save this country. Because he was so wonderful. I mean, that thrill down my leg. It meant he was wonderful, right? Didn't it?
Megan,
With respect:
Obama is terrible, and frankly you should have known this. Radical misallocation of priorities is going to be the norm going forward.
Geitherner is terrible, but you can be excused for not knowing this. However, supporting an unknown, with no knowledge, is a breech of journalistic responsibility. It makes people think you speak to speak, rather than consider your points; the process ultimately reduces credibility.
Second, the only problem with the vetting process is that the nomination process is only producing liars and thieves. The vetting process is working quite well! It should also tell you a lot about the circles these people travel in; that is, if you are open to the obvious conclusions
What is happening to you? It's politics over qualifications, form over function - our president and our very era in a nutshell. You have been taken in. You are very intelligent and very articulate; however, you need to reconsider your decision making process. It is continually leading you to false conclusions.
On the other hand there are those of us who would prefer that the government stop interfering with the markets. If this happens due to fear and paralysis rather than philosophy and policy so be it.
Let's remember exactly who's going apeshit over every nominee with nanny or tax problems before we blame Obama for making very sure that doesn't happen again.
------------------------------------------------------
Lets remember who promised that there would be a new level of ethics in government.....
"every official will have to rise to the standard of proven excellence in the agency's mission."
and then immediately nominated a tax cheat - no wait two tax cheats. Oh, and a governor under investigation..Oh, and a former Senator who didn't declare the free use of a car and driver for 4 years ..thus a tax cheat.
So tell us. What is so hard about finding somebody with Treasury level experience that isn't a tax cheat? Or who buys into Obama socialism?
Nanny tax issues in and around NY (where lots of finance types are from) are like speeding. Yes, it's against the law, but pretty much everyone breaks that particular law except for a few people whom we should all admire for doing a steady 55 in the right hand lane.
We once disqualified candidates who admitted to ever having smoked pot. Eventually we realized that was stupid. Eventually we will also have to get over the nanny tax thing as well.
"Yet on the really crucial problem of what to do about the banking system, he's been very nearly silent, going to Congress with a non-plan-plan that terrified the very markets it was supposed to reassure."
Get it straight princess, Geithner is there to fix the structural problems of an economic system in free-fall, not placate the stock market. Typical woman; the foundation is cracked and the building's falling apart and you're complaining about the paint. A one day fall in the Dow ain't the end of the world. There's a lot of bad news out there that's weighing the market far more than one little speech.
"The gigantic stimulus package that Obama passed will fall flat on its face, as contracting credit markets absorb the multiplier."
I didn't realize Ms. McArdle was moonlighting as a fortune teller. Hopefully, this prediction turns out as well as her forecast of how great a VP pick Sarah Palin was.
"That the Obama administration has been conserving political capital for its stimulus package and its budget, rather than its treasury nominees, is a radical misallocation of priorities."
Obama has been in office a month and two weeks. He hasn't had time to spend his 'political capitol'. Further, when Republicans spent their 'political capitol' on an adventure in Iraq, that was a misallocation of their priorities.
Republicans praying for Obama's downfall aren't doing themselves any favors, much less the country any favors. They look like idiots, which is understandable because they are idiots. "Socialism . . . Comrade Obama" Get your heads out of your asses. If you voted for Bush, you own a piece of this crisis. The least you can do is fake a little optimism that Obama's policies might work.
It's hard to know how to evaluate Geithner and the bank bailout plan, especially given the media's tendency toward hysterics, relying on the same set of know-nothing pundits, misinformation and one bias or another.
It seems to me that since the Obama plan is really nothing more than an extension and ever so slight tweaking of the Bush/Paulsen plan, that it has been closer to 5 months than 2 months, and so I would reasonably expect to see something happening or to hear something more detailed that would give the public and the market some confidence that things are on the right track.
But it feels to me like the plan has not worked, will not work, and that for whatever reason, the Obama Administration is in a holding pattern and appears more concerned with the stimulus, budget and health care reform than the financial system having collapsed. But, what do I know.
---Wait, it's somehow Obama's fault that the media and the GOP harp on nannies and tax evasions? --
Hey, if you really want to punish the rich, how about punishing those tax cheats? How about those who exploit illegal immigrant workers and don't give jobs to Americans, while not paying their social security taxes.
Has it really gotten so bad that only the Republicans care if the rich pay their fair share of taxes?
---If, as I read, it is true that Geitner, in preparing his own returns, and, among other things, he treated the cost of his kid's overnight summer camp as a deductible child care expense, he isn't guilty of misinterpreting a complex---
Tim, is that you??? I call misdirection. Geitner failed to declare income from the IMF. VERY LARGE gross up income that we was provided documentation which instructed him to report.
Tim, you are guilty.
Why would anyone honest want a government gig?
Political opponents with rip them an asshole, spreading rumors and the press will gleefully join in the character assassination.
Any decent person will avoid the limelight at all costs.
---Nanny tax issues in and around NY (where lots of finance types are from) are like speeding.---
Yes. We people in fly over country are greatly comforted by that. Our lords and masters in New York like their illegal alien slaves and we shouldn't be upset about it.
Geithner selects Annette Nazareth to be one of his deputies and she withdraws her name from consideration. It isn't because of tax problems, but because of what she did at the SEC. She was in charge the Market Regulation Division. It was her job to provide oversight and impose an oversight regime. She failed to pick up on the credit mess and the massive risk taking, and realized that her confirmation would be an abject disaster.
Geithner's being hamstrung because there's no one clear of this financial mess and because of his and Obama's problems in vetting candidates (the aforementioned problems in finding candidates who don't have tax problems or nanny problems).
The same pool of people who are qualified to work at Treasury or the SEC are the same people who were at the investment houses and in positions where they either were directly involved in creating the credit mess or did nothing to stop it.
The inmates would run the asylum.
Geithner was always an odd choice for the job, notwithstanding the tax troubles. He was at the NY Fed and intimately involved in the original bailout scenario, and yet didn't do anything to prevent the situation from getting out of hand prior to that. Where was the proactive position to demand banks tighten their lending standards?
The situation is bigger than Geithner and Obama hasn't exactly made fixing the economy a top priority as per Rahm's admissions. It's about using this crisis to push the rest of the agenda. The markets would settle down if they got a clear direction from the government, but the dithering only makes the markets ever more skittish.
"We once disqualified candidates who admitted to ever having smoked pot. Eventually we realized that was stupid."
"Eventually" meaning "when it had a negative affect on a Democratic candidate. Kinda the same as snorting coke: bead if it was Bush, an unnecessary distraction when it was Obama.
You people are unbelievably obtuse and transparent.
"A one day fall in the Dow ain't the end of the world."
One day fall?? Are you serious, Mr. 1040EZ???
"The administration has so far failed to staff treasury because it is unwilling to take any political risk that a nominee will have a tax or a nanny problem."
Because heaven forbid that we should have people responsible for enforcing our economic policy and collecting our taxes, who are willing to live by those policies and pay those taxes themselves! Did we* really elect Obama so that he could appoint a government that is wholly above the law and exempt from the consequences of its own actions?
* And by "we" I mean you people here who seem to want to blame republicans for the fact that Obama can't seem to appoint anybody who wouldn't be headed for prosecution if they had an (R) next to their name rather than a (D). Personally, I held my nose and voted McCain - a decision I regretted having to make at the time, but which I regret less and less by the day.
"We once disqualified candidates who admitted to ever having smoked pot."
On the other hand, I have to think even the Democrats would think twice about confirming a Drug Czar that was actively toking up and only quit because he got caught in his hearing.
I don't have to agree with either the drug laws or the tax laws to question the hypocrisy of those who aspire to oversee them. That is a character issue more than anything.
Is it possible at this point that many/most/all talented executives would refuse to work for Geithner?
At this point, Geithner looks like such a buffoon (and under Larry Summer's thumb, to boot) who'd want to take one of the important undersecretary jobs?
Yes, it's against the law, but pretty much everyone breaks that particular law except for a few people whom we should all admire for doing a steady 55 in the right hand lane.
Taxes and immigration law are for the little people.
Look, Geithner's in way over his head. He's a technocrat. The politics are killing him, and he can't respond. Sure he's a tax cheat,too. He's probably hen pecked and needed the dough.
Obama needs to can him and consolidate his losses.
And he needs to replace him with a player. A big swingin' player.
And then reduce the loan loss reserves--watch the market then.
I was toying with a theory a few weeks ago... that as Obama's plan wreak destruction, panic and voters'-remorse, that his advisors and appointees will seek to distance themselves from him - up to and including resigning. Perhaps the problem with appointees is that no-one WANTS to be associated with him? Perhaps there's just too much risk to their reputations, or they fear that other "Ogenda" items will supercede their sage advice, rendering them ineffective and ridiculous? Weren't there 2 appointees who just backed out today (see Drudge)?
I'm not sure there are enough data-points in yet - but, comments anyone?
If anyone was having second thoughts about casting Geithner overboard, please take a close look at this news article reviewing a speech by former Australian PM Keating:
http://www.smh.com.au/opinion/obamas-economic-saviour-savaged-as-keating-lets-rip-20090306-8rk7.html?page=-1
Heck of a job Geithner-ie! Heck of a job!
Geithner doesn't need to go, he is a clerk, he should step down a notch to fill one of the positions that are languishing.
As far as who would fill his spot, I've heard bold, clear workable frameworks from ordinary citizens online, too bad we can't recruit any one of them. That would solve the stickiest issue: no one in our Federal-Financial-Political Borgoplex is innocent. How can this Oligarchy that created, gained power, and profited from this mess be expected to clean itself up? The nation desperately needs a true outsider here, but the self-policing foxes will never allow it.
The Worst Congress Ever, with their Fannie-Freddie fingerprints, is as culpable as any Wall Street banker (where Rahm-bo made millions himself by the way, before he was on the FRE board during its fraudulent years), and Biggest-Hedge-Fund-Donations-Ever Obama is the debonair front man for them all. Thick as thieves.
The adhoc confusion is in the interests of these empowered ones, so they can mine it for all the power and wealth possible, and we will be left to pay dearly for it.
Tea, anyone?
What the fuck is wrong with you people?
Seriously, what the fuck is wrong with you?
Geithner is invaluable. Why? Because he's going to help save us from "global warming". That's right! A completely screwed up economy is not enough of a problem for good old Tim. He's also going to save the planet.
Per Reuters on March 4: ""We don't believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don't think that's good economic policy and we think changing those incentives is good for the country," Geithner told the Senate Finance Committee at a hearing on the White House's proposed budget for the 2010 spending year.
The Obama administration's budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019."
So Tim believes that raising the cost of everybody's energy while the economy is in the tank if a good idea. Too bad Obama and Tim weren't in office earlier. Then the unemployed could be spending 8 bucks a gallon for their home heating oil. They'd be HAPPY because they'd know that they were doing their part to solve "global warming".
Then again, it this causes LESS employment in places like Texas and Louisiana, those unemployed will rejoice in the knowledge that, they too, are doing their part to save the world.
I'm telling you. Tim's just an absolute genius.
A scarier thought: what if Geitner is representative of the competence level at the top of the Fed?
We cannot fix the bank crisis. The problem is that banks have been forced to "loan" large amounts of money to too many people who don't have the slightest chance, nor any desire, to ever pay it back.
To make that worse, anyone who wanted to tighten up the loan requirements would be hauled up before people like Frank and Dodd and Rangel where they would probably end up jailed.
@lawhawk
"He was at the NY Fed and intimately involved in the original bailout scenario, and yet didn't do anything to prevent the situation from getting out of hand prior to that. Where was the proactive position to demand banks tighten their lending standards?"
Huh? Are you unaware sir that the FED is a private banking organization? The FED is not a regulator. The FED, and its member banks, are the businesss to be regulated.
Obama has appointed an insider to regulate the very banks he was formerly employed by. And people wonder why nothing is getting done?
Nothing is getting done because Geithner is the standard bearer of the status quo. His job is to protect the private banking system of which he has been an employee all his life.
His job is to ensure that banks are not hurt; rather that taxpayers get put on the hook for the very actions that he, as the leader of the NY Fed, made occur.
The FED is protecting its members; and one of their own has been anointed as its regulator.
It is the very definition of "the fox guarding the henhouse."
I am amazed that after just 6 weeks, so many people are unhappy with Obama, including :
Mureen Dowd
Paul Krugman
David Brooks
Christopher Buckley
Jim Cramer
I predict that within 18 months, people will be legitimately debating which Hussein caused more human suffering, Barack or Saddam?
Yes Geithner should be let go and replaced with someone that, you know, has actually done something in the real world. Geithner is a very unimpressive individual with limited intellect and no experience outside of government service.
A bunch of bureaucrats and professors are not going to lead us out of this economic crisis. It'd be nice if Obama would bring someone into his administration that wasn't a professor or career bureaucrat.
"Yes Geithner should be let go and replaced with someone that, you know, has actually done something in the real world."
Why should Obama start associating with such people, when he never has up to this point?
Surely they don't want to tarnish their perfect record of no private sector success in the entire administration.
We just CAN'T nominate candidates for Treasury because those partisan Republicans just won't stop playing political gotcha games! The GOP forces us to vet Obama's cabinet- and sub-cabinet level Treasury people to ensure they COMPLY WITH TAX LAW! Oh the humanity! Small wonder why smart, successful people won't go into government, when we hold them to such ridiculously high standards.
The next thing you know the GOP will refuse to allow a floor vote on them for two years (like Manuel Estrada) and might even bring up witnesses to discuss pubic hairs on Coke cans!
It's all the Republicans fault that the economy is rudderless right now. Never mind those overwhelming Congressional majorities. Nothing to see here, move along.
There is only one thing to do here. Obama needs to dump Geithner and replace him with the only man who has any credibility left -- Paul Volcker. Larry Summers is an arrogant jerk who is just biding time until Obama appoints him as the new Fed Chairman to replace Bernanke next January -- a colossal mistake. Rubin was tainted with his involvement at Citi. So it comes down to Volcker. He handled the job for an inept Jimmy Carter and he will have to do it again for Obama, the emperor with no clothes.
I will be sorry to see Bernanke, the only true hero in this whole mess, leave the scene.
I love your assumption that there are no qualified people to fill these slots because people who have made enough money to be able to handle and understand these issues all have nanny and tax problems. Earth to Megan ... there are lots of people out there who have made some money but who still have managed to pay their taxes. The problem is not the lack of Obama's political courage to nominate people with tax and nanny problems ... the problem is that apparently the types of candidates he is drawn to -- liberal democrats -- apparently don't feel the need to pay the taxes they'd like to impose on the rest of us.
If the President is the "Great (Black) Father", then Geithner is truly a chip off of the old block.
When he leaves, too bad he can't take "the block" with him.
It's plausible that Geithner is on the way out. It's also plausible that nominee candidates for Treasury positions would withdraw, sensing this, rather than to attach themselves to his trajectory. If Geithner collapses, then the President will have carte blanche to appoint a more controversial figure to the position, like Volcker, since he tried the more conventional choice first. People used to call Paul Volcker, "Darth Vader." Remember that he pushed the prime rate to 21.5% and killed inflation dead? Perhaps people are frightened enough or disgusted enough to be ready to accept someone with that kind of strong medicine. And post-Geithner, he could be confirmed, although some Senators might faint.
Geithner has done a suburb job in delaying the day or reckoning for the financial giants. I mean he couldn't just write 5 trillion dollar checks to Goldman Sachs and JPM so under the complex circumstances he has done fine.
The transfer of liabilities to the Treasury which will lead to its virtual destruction is not the job of a timid man. No, its the job for a giant.
When the budget of the US and the 'Feds' monetary and regulatory policies are set by Wall Street, which they will be in a few years when their bonds are superior to the Treasuries there might be little discreet alters honoring Tim. After Henry Paulson of course.
The administration's vetting procedure has gotten entirely out of hand.
What vetting process? The economy is entering a death spiral thanks to the Porkulus bill and socialized medicine, and all Democrats care about is demonizing Rush Limbaugh.
It is easier to campaign than govern effectively, and that's why Democrats have returned to their first love - the politics of personal destruction.
Can someone please provide some journalistic evidence that the two undersecs at treasury withdrew because of tax or nanny reasons?
Seriously, why do you assume this is the case? I've read nothing to substantiate it, and you don't quote a single source in this blog post.
Aren't there a dozen more likely reasons at this point--that 1) all of the people who might be considered for these jobs worked for a) the govt institutions that did nothing to prevent this meltdown, or b) the banks that created this meltdown, and no one wants them anymore? or 2) That the most skilled people are the ones who were at MS or GS or Citi trying to keep them afloat, and they don't want to throw away what's left of their career joining an administration that talks about how evil the banking folks were? or 3) That no one in their right minds would jump into Treasury now because Obama has already signalled that he won't let Geithner do what Geithner thinks is best--or it'd have been done by now--therefore, you'd never succeed at any of the difficult problems because you'd never be allowed to take such political risks?
After seeing Geithner throw the oil industry under the global warming bus, when he could have made an economic case for the proposed taxes he was defending, I have to conclude that the lunatics are definitely running the asylum... and whether Geithner said it out of conviction or under duress matters little. That is the tone of the place, and the intelligence level... why would anyone of quality want to work in such an organization?
The Dems and the MSM (but I repeat myself) told us that Obama had judgement even if he did not have experience.
Does anyone believe that now?
Also, the President had MONTHS before his inauguration to come up with a plan and then present it. He does not need staff in position to do this - it should been ready for Jan. 21st.
Considering that Tim Geithner has committed multiple counts of felony tax evasion, he not only should be fired from his job at the Treasury, he should be investigated by a grand jury and arrested.
Mr. Geithner is a thief. He does not belong in public office, he belongs in a jail cell.
I've been saying this for weeks now. And since he's pretty much confessed to this, one would think that a swift conviction would be a slam-dunk, no?
And yes (contrary to Obama's desires), we need to bring more people in from the productive class to hold these government jobs, for a short time--and then return them to the productive class. Term limits for all in government; nobody suckles from the public teat for more than a decade. It's our only way out of this mess.
For a worrying story from the Sydney Morning Herald today reporting comments by former Australian Treasurer and Prime Minister, Paul Keating, on Tim Geithner’s earlier arguably poor performance in the Asian financial crisis see: http://www.smh.com.au/opinion/obamas-economic-saviour-savaged-as-keating-lets-rip-20090306-8rk7.html
I just hope that the Obama Administration and the US Congress are making the right economic decisions but the more I read the more worried I get. The US mainstream media coverage of these vital economic issues is of an alarming shallowness and the contribution of too many mainstream academic economists points to a profession that has diverged too far from being grounded in reality.
It is not just US voters that have a stake in the decisions being made (or not) in Washington DC. The rest of the world is watching and hoping the Democrat leadership gets this right for everyone's sake.
Why he chose geithner : because geithner was supposed to know where the bodies are buried. and
because obama really wanted larry summers but choose his butt boy
geithner instead because geithner is more diplomatic and obama is
terrified of Summer's social awkwardness and bullishness after what
happened at harvard. He also probably didn't choose Volcker because he
might plop dead (he's 82 or 83) and the markets would crash. And maybe
he was also afraid larry summers might die of a heart attack. he's a
porker ya know? But all joking aside...
regarding AIG, Geithner wont answer because he can't. Because of
Europe and China.
REUTERS: Lawmaker: AIG failure would "bring down Europe"
http://www.reuters.com/article/pressReleasesMolt/idUSTRE5247CU20090305
Plus, AIG owns 19.8% of People's Insurance Company of China (PICC)
through direct and indirect holdings.
The entire world would convene and have enormous leverage over us
after what Bush has done to them, and after what the Americans and
their AIG did in spreading this financial crisis to the rest of the
world, where the effects have been worse than here at home, thus far.
Remember what the rest of the world did to Germany?
Cal: "I refuse to believe there are no honest and competent Democrats that President Obama could nominate if he wanted to."
The requirements are honest, competent, prominent, and ideologically compatible. I wouldn't be at all surprised if there are no prominent people in either party that haven't cheated on taxes, but the Republicans seem slightly better at not getting caught.
Then again, if Obama's ideology is what his past associations and actions suggest it is, rather than what his campaign claimed it was, ideological compatibility = flaming socialist, and that's quite incompatible with economic competence.
Ken: "But based on your assumptions, it is a perfectly reasonably defense. 'I would like to follow the laws, but I cannot understand them to make sure that I am, and cannot hire anyone who can ensure my compliance'
And IF that is the case, then you are right, everyone should get a pass, until the system is reformed to something manageable."
That might have been a good excuse if Geithner miscalculated his self-employment tax - although when my wife had self-employment income from Avon, I managed to figure her self-employment tax by hand, this being before home computers were common or powerful enough to run anything like user-friendly software. But that we had to pay it was quite obvious, no matter how complicated the form to figure our liability was.
Geithner did not pay this tax at all, in spite of reminders from his employers. He quite obviously deliberately evaded that much of his taxes.
So I'd have more respect for him if he had told the Senate, "Sure, I tried to cheat on my taxes, like most of you, I got caught like some of you, and I paid the penalties." And if he hadn't paid at the last minute for the two years that he didget away with, due to the IRS taking five years to catch on. But possibly the statute of limitations on fraud hasn't run yet, and that would be a confession...
Did you remember the movie The Untouchables, with Kevin Costner as Eliot Ness and Sean Connery as Jim Malone? Malone, knowing that nearly every cop is corrupt, takes Ness to the Police Academy to pick a Cadet not yet sullied by the system (he takes Stone, played by Andy Garcia).
I think we should staff the boards and management of our insolvent financial institutions (and any other companies asking for public money as well), and all top Treasury officials, from the graduating classes of our business schools.
Random assignment would be fine.
"Then again, if Obama's ideology is what his past associations and actions suggest it is, rather than what his campaign claimed it was, ideological compatibility = flaming socialist, and that's quite incompatible with economic competence."
Excellent point, and very well put.
"Henry Blodget thinks it is time for Timothy Geithner to go."
As if Blodget, with his track record, is the guy to judge the competence of anyone else.
In reality Geithner's problem is Barney Frank -- both literally and figuratively.
Frank was just interviewed in the Financial Times saying that the financial rescue from here on in must: (1) NOT drop any more big costs in the taxpayer, (2) NOT cause big losses to the banks' creditors -- he says "good people" should not suffer losses on their bond investments, nor should innocent pension funds or endowments, (3) NOT cause bank shareholders such losses that potential future sharehodlers would consider investing in banks risky and so be reluctant to do so.
Now there are only three parties that can bear the losses that remain to be realized in the banking system: Bank shareholders (though they have already been pretty much wiped out) the banks's creditors, and taxpayers.
Barney Frank and his fellow politicians have charged Geithner with the task of coming up with a plan that will drop the losses on none of them.
This is Geithner's problem.
Henry Blodget himself could not accomplish such a task!
Ann @ 1:55:
Agree, too. Obama chooses people on their beliefs first, and never their morality. Heck, he thinks terrorists ayers and Dohrn, his "family friends", somehow are good people, merely because they agree with him. And let's not forget reverend wright...
Obama is stuck in a political quandry. His administration is thus far loaded with corrupt people from the get go--usually, it takes at least a year before these charges come out. The fact that he's had such a bad time picking decent people (or at least seemingly decent people) indicates his weakness.
That being said, if he removes Geithner now, he gives into a "revolving door" government image, seems more incompetent, and the action will send the stock market plunging from the uncertainty. If he doesn't, and Geithner continues flailing, we crash more.
Hence his attacks on Rush. Total misdirection attempt. If people concentrate on what Rush is doing more that Geithner, Obama gets a break.
Jim Glass, if you note here
http://www.ft.com/cms/s/0/d55a910a-0522-11de-8166-000077b07658.html
The Financial Times paraphrases Rep. Frank as saying a solution should not lead to a 'wipeout' of bondholders. Presumably, a debt-for-equity swap would present the bondholders with an asset with a resale value well below the par value of the bond. It would not, however, wipe them out.
The problems of the Obama Administration is having in staffing its positions are a cause for dismay. They not, however, all that surprising. Mr. Obama has superintended ephemeral organizations such as electoral campaigns and organizations of very modest size and complexity, such as his Congressional legislative staff. The staff of campaigns and legislator's offices exist to serve the politicians who sit atop them. Not so public bureaucracies. Last fall there was quite a bit said about the inadequacies of Gov. Palin (the only one of the candidates who had superintended a public bureaucracy) and quite enough in November (courtesy Dr. Krugman et al.) about the 'adults taking over' on 20 January and so forth. It seemed bizarre at the time and now we are all learning the hard way what piss water it really was.
"The Financial Times paraphrases Rep. Frank as saying a solution should not lead to a 'wipeout' of bondholders. Presumably, a debt-for-equity swap would present the bondholders with an asset with a resale value well below the par value of the bond. It would not, however, wipe them out.
The creditors of Citibank exchange all of most of the $691 billion of debt obligations they own for a penny stock, enterprise value negative, -$46 billion.
"Wipe out" is such a subjective term. Is this a "wipe out" as Barney does not want to see occur or not?
The really scary thing is that Geithner probably is the best the democrats can come up with.
It must sting like hell the lefties to have to admit that Sarah Palin was better qualified on day one than Obama. At the rate Obama is going Dick Cheney could beat him in a landslide if the election were to be held in a years time. Obama has done the seemingly impossible, he is making Bush look like the wise elder statement in comparison. A year from now he will make Bush look like a rocket scientist in comparison as well.
Darth Cheney in 2012. He will be tanned, rested and delightfully evil to run the world. No lightweight like Nixon but the real deal, brimming with gravitas. Can't hardly wait.
Jim Glass,
The current market capitalization of Citigroup is derived from the present value of exepected future returns and reflects in part the drain of servicing its current obligations. If you remove that drain through a debt-for-equity swap the net income for equity holders is correspondingly enhanced. The book value of the corporation is at the same time radically altered. They will not be wiped out.
Geithner failed in his regulatory duties as head of the New York Fed and bears a large part of the blame for the credit crisis to begin with. Getting confirmed as secretary of the Treasury did not magically bestow him with competency.
Time for Tim to go? He never should have arrived.
Former Australian Prime Minister Paul Keating had some damning stuff to say about Geithner in that Sydney Morning Herald piece a couple of commenters linked to above ("Obama's economic saviour savaged as Keating lets rip"). For those who haven't clicked on one of the links, here are a few excerpts:
I hadn't realized that Geithner's "claim to fame" was getting the IMF to force Indonesia to slash spending in response to the Asian flu. What a disaster! How did he come out of that with a good reputation?
In this crisis, President Obama needs someone who knows economics, is trustworthy and warned the American people decades ago that sooner or later that this was going to happen. Put Congressman Ron Paul in as the treasury sectretary. He is the only man alive that has chance of fixing this.
DaveinHackensack, what Keating is not saying is the fact that Australia itself had signed a treaty exploit Indonesia's oil resources. Australians should know that their own country was a party to exploitation of other countries resources. Also Soeharto murderous regime was supported by Australia when it invaded East Timur.