Obama's Bad Replacement Choice for His Current Bad Treasury Sec

[Jack] Lew was only at Citi for about a year and a half—but it was the year and half leading up to the 2008 financial crash, which also totaled CAI. When Lew walked away from the wreckage, he managed to take his $1.1 million salary and a $900,000 bonus with him—even as Citigroup was becoming a poster child for the Treasury’s new AFDC (Aid to Financially Dependent Corporations) program.

The gory details of how Lew earned his money at Citi (by shorting the housing market, in cahoots with a hedge fund manager who helped Goldman Sachs do the same at the expense of its long clients) have already been well reported, so I won’t reexamine the entrails here.

  Billmon

President Obama won reelection in part by beating up on his opponent for receiving big corporate payouts in exchange for dubious work and for socking away money in tax havens such as the Cayman Islands.

So it’s a bit, well, rich that Obama chose as his new Treasury secretary a man who received a big corporate payout for dubious work and who socked away money in the Cayman Islands.

[...]

Lew, who was White House chief of staff while Obama’s campaign was pummeling Romney over his pay and taxes, received a $945,000 bonus in January 2009 after a brief tenure at Citigroup — just as the bank announced huge losses and took a taxpayer bailout. Lew also invested $56,000 in a Citigroup venture-capital fund registered in the Cayman Islands — registered in the very building[Ugland House], in fact, that Obama labeled “the largest tax scam in the world.”

[...]

“It’s no wonder that maybe you and the president haven’t proposed legislative solutions to what you consider, or what the president considers, a tax scam,” Grassley observed.

[...]

Lew’s confirmation isn’t in doubt, a fact supported by the way he sauntered down the hall to his hearing in the Dirksen Senate Office Building, hands in pockets.

  Dana Milbank - WaPo

They like to take shots at each other, but as long as the end result is the status quo, their arguments are just for show.

Have a quick look at the information available at the time Obama made Lew his Chief of Staff. 

...but hey, do what you want...you will anyway.

More of the Same

Whoooo-EEEEEEEEEEEEEEE! The casino's open again, boys!

A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives. After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

Jesus H. Christ on a Galilean seesaw, and they say vaudeville is dead.

[...]

Criminal investigators can bust the Russian mob. They can break up drug syndicates. They doggedly run 'roided-up pitchers into court. Twice. They beat hell out of Napster. But set them down amid the financial-services crowd and, suddenly, they can't find a whore at high Mass. (Yeah, yeah. "Look on the altar." Ya bastids.) At this point, it is clear that people like Corzine, and Lloyd Blankfein could put on masks and start sticking up fruit stands all over lower Manhattan, and get away with it because of  "the difficulty in prosecuting crimes like these."

This is what "looking forward, not back" really looks like. This is the inevitable consequence of hiring Tim Geithner and steeping yourself in the transparent fantasy that anyone on the upper levels of Wall Street was innocent in the general looting that led to the general collapse.
  Charlie Pierce

...but hey, do what you want...you will anyway.

Unless It Was Intentional, Of Course

As someone who supported (and supports) TARP, my criticism [is] primarily aimed at the failure to condition bank bailouts on their taking actions that helped homeowners.

[…]

I don't think [Treas. Sec Tim] Geithner's motivations really matter on this. His policies on the homeowner crisis were simply incompetent, disastrous and by any measure a complete and utter failure. If that answer is difficult for you, then you are either ill informed or not telling the truth.

You can argue that Geithner faced political constraints that did not allow him to go further, but that is not what Team Geithner has ever said. They said they got the policy just as they wanted. This seems likely in that there was over $40 billion available to structure a much better homeowner relief program (for say, a HOLC program.)

[…]

The long and short of it is Tim Geithner has a been a terrible Treasury Secretary when the country needed a great one.

Speaking for me only.

  Talk Left

No. For me, too.

Bailout

Neil Barofsky, the Inspector General of the TARP bailout program from 2008 until 2011, has a must-read new book entitled Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street. When he was serving as IG, I praised Barofsky’s independence and adversarial watchdog mentality several times when he was warning of the Treasury Department and Tim Geithner’s overarching devotion to the interests of Wall Street at the expense of everyone else. But this new book lays out the case as clearly and powerfully as it can be made that the Obama administration and Geithner, as The New York Times‘ Gretchen Morgenson put it, “eagerly served Wall Street interests at the public’s expense, and regulators were captured by the very industry they were supposed to be regulating.”

[...]

Barofsky is as well-positioned as it gets to describe the priorities and loyalties of the economic policymakers inside the administration, and is one of the very few Washington officials with the independence and courage to do so. Unsurprisingly, his book presents the definitive case for how the Obama administration devoted itself to the interests of the very plutocrats who precipitated the financial crisis in the first place.

[...]

As one very good review of the book began: “I sincerely did not think it would be possible at this point to lower my opinion of Tim Geithner. Nor did I think it possible, after the year and a half I just spent there, to make me think less of DC. . . . [F]ormer TARP watchdog Neil Barofsky has accomplished both with his just-published book Bailout.” Barofsky has been particularly critical of the Treasury Department’s failure to use the billions in funds allocated by Congress to help distressed homeowners as part of the HAMP program, on the ground that bankers — rather than ordinary Americans — were their only real concern (MSNBC’s Chris Hayes, citing this New York Times article on the administration’s HAMP failures, previously said that the “[White House's] foreclosure mitigation failure has been so egregious and cruel, it makes me question their motives on everything”).

Predictably, Barofsky, a life-long Democrat and 2008 Obama supporter, has now become a Prime Enemy of Democratic partisans and banker-loyal, establishment-protecting, status-quo-perpetuating apparatchiks.
  Glenn Greenwald

Financial Reform? Bah. Humbug.

Among the more laughable features of commentaries on Jamie Dimon’s recently revealed $2 billion (at least) gambling losses are earnest pronouncements that the debacle will stymie the efforts by Dimon and Wall Street in general to further deregulate the financial industry.

[...]

The last time naked credit default swaps (naked meaning they are traded as speculative bets rather than hedges) got in the headlines was the fall of 2008, when, via the massive exposure of AIG to these same instruments, the global financial system trembled on the brink.

[...]

Major players on Wall Street were swift to take action. Led by Dimon’s JPMorgan Chase, nine leading financial institutions set up the CDS Dealers Consortium and hired the master derivatives lobbyist Ed Rosen, of Cleary, Gottlieb, to keep things in order. Rosen crafted a memo suggesting that the market remain under the benign supervision of the Federal Reserve (which at that point was underwriting the banks to the tune of $7 trillion and more.) Meanwhile Timothy Geithner at Treasury was working on his master plan for policing the CDS market. Eventually, in May, 2009, Geithner unveiled his proposal, identical in all essential respects to Rosen’s memo.

A lot of money has flowed under the bridge and into legislators’pockets since then. The Dodd Frank financial reform legislation finally hit Obama’s desk, laced with loopholes and riddled with exceptions.

[...]

Now comes the fiasco of [JPMorgan's] $2 billion (make that $4 billion, at least) loss on a hugely stupid bet dutifully reported in the media as a “hedge.”

[...]

Back in 1986, Dimon was the bright young protégé of “Sandy” Weill, when he was forced out of American Express in a coup de requin. Master and servant made their way to Baltimore, Maryland, where Weill acquired a storefront moneylending firm called Commercial Credit. Potted media biographies flung together since the news of JP Morgan’s massive gambling losses broke last week put a decorous sheen on this phase of Dimon’s career. ABC News for example described the Baltimore company as “a sleepy finance firm that catered to middle-class clients.” Weill’s former assistant, Alison Falls, got it right at the time. “Hey guys,” she is said to have remarked “this is the loansharking business.”

  Counter Punch

...but hey, do what you want...you will anyway.