This week a new era of bipartisan politics was ushered in during the congressional hearings addressing the AIG bailout. Treasury Sec. Timothy Geithner failed with both Democrats and Republicans to pass any reasonable stink test. In fact one of his own, Rep. Stephen F. Lynch (D-Mass.), said with an edge in his voice, "It just stinks to high heaven what happened here."
I watched the hearings for several hours. Little belief was to be found among the members that Mr. Geithner or Paulson did anything other than panic during the potential meltdown that occurred in Sept. of 2008. Regardless of how many times Geithner demanded Congress acknowledge his brilliance in saving the world, nobody was buying it.
The lack of fully answered questions and the abundance of arrogant, angry and condescending behavior from Geithner was appalling. He acted as if the U.S. Congress had no right to ask him such questions. How dare they challenge his genius in getting us past the "worst crisis since the Great Depression." He basically said, I saved your ass and this is how you treat me?
In the many hearings I have watched over the last 30 years I have never witnessed this level of slithering, spinning and tortured answering in an attempt to avoid the truth. Mr. Paulson was somewhat humble, at least in comparison. And while his unsupportable assertions, such as unemployment going to 25 percent if they had not acted, were laughable, at least they weren't offered with the snotty Ivy league arrogance spewed from Geithner.
I would be shocked if Tim Geithner is able to maintain the confidence of President Obama after his performance this week. On the off chance he does, we need to really question the competence of the president.
Geithner refused to ever directly answer the burning questions: Why were Goldman Sachs and others paid 100 cents on the dollar for their exposure? Why were they not asked to take a "haircut"? Why didn't Geithner and Paulson offer 75, 80 or 85 cents on the dollar to reduce taxpayer exposure? Why wasn't such a strategy even explored? His only answer? "The system would have failed."
Do the present and past Treasury secretaries want Congress to believe if Goldman had lost $3 or $4 billion the result would be the total meltdown of the financial system? Goldman pays multiples of that in bonuses every year. That assertion is incredulous in any sane person's thinking.
Bear Stearns, Merrill Lynch and others took huge haircuts and the system survived; but Goldman losing a few billion would have done us all in? Come on, Tim. Not one of the members was buying it. There was extraordinary bipartisan agreement that you were full of it.
When pressed about the members of his staff and their past employment, Geithner became downright rude. Many times he had to be reprimanded by Congress to just answer the question without adding sarcastic remarks such as, "you know the answer to that question congresswoman." The answer? Most of them were former Goldman employees.
It appears Mr. Geithner's memory is rather short when it comes to his responsibilities as the president of the New York Federal Reserve Bank. As such he was to monitor conditions and set policy that would not allow bubbles to form. The exact opposite happened. It was the banks under his direct supervision in New York that were melting down and presenting possible risk to the whole system.
Geithner was constantly claiming his actions as the newly appointed treasury secretary were all targeted to protect the American people. Yet every question asked and slightly answered indicated Goldman Sachs was protected, not the American people. Of course one can hardly question why. Paulson and most of Geithner's team were alumni from Goldman. They were protecting their pensions and stock portfolios, not America.
Geithner's favorite response to difficult and revealing questions was, " I disagree completely." Well Tim you were the only one in the room who did. Question after question clearly illustrated Geithner, Paulson and Bernanke panicked. They believed their own analysis and were closed to any suggestion to the contrary. If e-mails are correct, many such alternatives were offered yet never got a second of consideration from Team Geithner. In my opinion, it was to save Goldman Sachs and 100 percent of their capital and profits, no matter what the cost to the taxpayer.
When Geithner characterized his decisions as, "moral, just and pragmatic," I almost fell out of my chair. Is he kidding? Moral to bail out AIG with our (taxpayer) money so his cronies at Goldman got 100 percent of their money? Shouldn't Goldman participate in the losses? They made billions in profits off flimsy SIVs and securitized mortgages and they were not asked to take one dime of loss? Maybe that was pragmatic to them but surely devoid of any sense of morality. Unless you are a soulless shill for the Goldman board.
Geithner is obviously an errand boy for Goldman. His actions exhibit gross incompetence or malfeasance â€“ take your pick. In either case, he needs to go. He is in over his head. So is his boss. How many rookies and their fear- and greed-filled decisions can our country survive?
I'm confident that the members of Congress left those hearings with the same impression as me. They listened to the key players (who allowed the system to fall into crisis in the first place) make lame excuses for why they panicked but allegedly saved the system. Now they are asking Congress for the authority to "fix" the system so it will not happen again? All the while never answering the single most important question. Why was Goldman not asked to take a loss?
I hope and pray for the best interest of our country that the members of Congress have the backbone and political courage to call for Geithner's resignation. After today's horrific display he should not be allowed one more day at the Treasury.
He can only make things worse. He needs to go and go now.
I am confident his resignation will have wide bipartisan support. If not, it is time to investigate all connections between Goldman and our federal government officials.
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