During his less-than-stellar press conference last night, President Barack Obama touched on the announcement of Tax-Evader-In-Chief Treasury Secretary Tim Geithner's plans to get the American financial and credit systems back on track:
And so tomorrow my Treasury Secretary, Tim Geithner, will be announcing some very clear and specific plans for how we are going to start loosening up credit once again. And that means having some transparency and oversight in the system. It means that we correct some of the mistakes with TARP that were made earlier, the lack of consistency, the lack of clarity in terms of how the program was going to move forward. It means that we condition taxpayer dollars that are being provided to banks on them showing some restraint when it comes to executive compensation, not using the money to charter corporate jets when they're not necessary. It means that we focus on housing and how are we going to help homeowners that are suffering foreclosure or homeowners who are still making their mortgage payments, but are seeing their property values decline.
Unfortunately, Obama's introduction was probably as inciteful as Geithner's presentation; the vagueness of the plans and lack of assurance from Geithner sent the Dow down nearly 400 points, with the NASDAQ and S & P down as well. There is a marked perception that Geithner is making it up on the fly, leaving many to wonder if he knows what he's doing. After the presentation, Geithner was at a Senate Banking Committee hearing. When asked how much will need to be spent, he couldn't give an answer.
Not only are conservatives like John Hinderaker and Michelle Malkin less than enthused (to put it lightly) about what Geithner is doing, but liberals like Paul Krugman and Andrew Leonard worry about how vague Geithner's plan is. Mark Thoma wasn't convinced by Geithner about what the Secretary plans to do:
To me, Geithner's attempt at reassurance, that they're not quite sure how the program will work, or if they will get it right, but be assured that they are determined to keep tinkering with the program until it does work, has just the opposite effect. It undermines confidence. Why not wait until they actually have a plan before going public? Why were they in such a rush to reveal that they aren't sure what to do, or if it will work?
Federal Reserve Chairman Ben Bernanke was with Geithner at the presentation, and there was a reason for this. From what I gather, the initial input of $500 billion of federal money into the banking system will come from the Fed (which is why Bernanke was there). There are two reasons for this: 1) the Fed can inject money into banks without any input from Congress (the dirty little secret about the Fed that isn't really a secret is that it is a fourth branch of the federal government, completely outside the control of Congress, and completely unaccountable for its actions); and 2) this will avoid having Geithner go to Congress to beg for the money on top of the Porkulus bill that is currently being resolved in conference. There is still another $500 billion from the Fed that Geithner may use, but may not; he doesn't say actually when he would need it. The other parts will probably cause Geithner to go to Congress, but for how much isn't known; figures of $1 trillion and $2 trillion are being tossed around.
Supposedly, there is supposed to be more transparency with Geithner's plan than what was done by Hank Paulson. That's great, provided it's true.
I keep wondering why Geithner, with all of his tax problems and his lack of oversight over the banking system when he ran the Federal Reserve of New York, was touted as the only person to be Obama's Treasury Secretary, especially since nobody seems to like how he's doing his job right now. Of course, it didn't help that Senate Republicans decided these issues weren't enough to disqualify Geithner for the job, although nobody in the real world could get away with what Geithner did and expect to get or keep a high-powered position.
It's going to be a long four years.