It's been a week now, and the hope is beginning to diminish. I had such high expectations though, that this was really just a matter of time. The first hint that Obama may not be the change agent I had hoped for came with his announcement in December that the Chairman of the New York Federal Reserve Bank, Tim Geithner, would be his pick to head the Treasury Department. Putting a man in charge of the Treasury who was a part of causing this mess we are in is akin to letting Charles Manson be in charge of prisons.
Geithner was one of the ones who did not do anything to stop the banks from lending to people who really should not have gotten loans at all and then sat back as the loans were securitized and sold off as prime investments. He was in charge of the NY Fed, the most powerful of them all, and thus had the opportunity and responsibility to tell the Fed Chief and Treasury Secretary that what was going on should stop. In truth, he just did not see a problem. There are many others, however, who did see problems and these people would have been a much better pick to head the Treasury Department than the banking industry's "yes man".
What has transpired in the banking industry - the bad loans given to people who had little ability to pay them off, the lack of oversight, the ability of banks to dump bad loans into the secondary market where they were bought up after having been given AAA-rated status by the rating agencies - all of this is what is behind the problems we now face. Why is this guy, who saw no issues unfolding and did nothing but encourage the bad behavior, now put in charge of the clean-up?
And his plan? His big idea to fix the problem? Well, he wants to use taxpayer money to buy the bad debt of banks and set up a "bad bank" that will be guaranteed to lose money so that the same people who made the bad loans in the first place - the banks - can restock their vaults and go forward. No reprimand. No fines. No penalties. No bankruptcy. Just some more of our hard-earned money because someone decided we just could not live without CitiBank.
The website MarketWatch today writes:
"The idea of a bad bank has been around for some time and has been discussed by new Treasury Secretary Tim Geithner and Federal Reserve Chairman Ben Bernanke, as well as others, over the past several weeks.
The Treasury Department's $700 billion Troubled Asset Relief Program began life as a kind of "good bank/bad bank" program, with the government setting up what may have been one large bad-bank entity to buy soured mortgage-related assets and other problem holdings from financial institutions."
This has been the plan and hope of bankers all along. They don't think (still) that they have done anything wrong and they want us to just give them money to fix "our" collective problem. Well, to hell with them. If I had made bad investments and couldn't pay my bills, would anyone be coming from the government to help me? Would anyone think I was serious about correcting my poor decision making if I went out and spent money I did not have on a luxury car?
Just yesterday it was reported that executives of large banks have gone out and spent billions in bonuses for themselves and staff, bought new luxury corporate jets and, in one particularly disgusting case, John Thain is reported to have remodeled his office to the tune of over 1 million dollars. Are you fucking kidding me?
So we get George Mitchell to go to the Middle East and fix them, but we get Geithner to help fix us. What a deal. Maybe we sent to the wrong guy to Israel.
"There's nothing in the street
Looks any different to me
And the slogans are replaced, by-the-bye
And the parting on the left
Is now the parting on the right
And the beards have all grown longer overnight
I'll tip my hat to the new constitution
Take a bow for the new revolution
Smile and grin at the change all around me
Pick up my guitar and play
Just like yesterday
Then I'll get on my knees and pray
We don't get fooled again"
- The Who