No Tough Love for Bankers
Robert Scheer is the editor of Truthdig, where this article originally appeared. His latest book is The Pornography of Power: How Defense Hawks Hijacked 9/11 and Weakened America(Twelve).
What an insipid anticlimax! Rising to "a challenge more complex than our financial system has ever faced," Treasury Secretary Timothy Geithner promised on Tuesday to give trillions more to the very folks who profited from that malignant complexity. For all the brave talk about transparency and accountability in the banking bailout, he gave the swindlers who got us into this mess yet another blank check to buy up the "toxic assets" they gleefully created.
According to the Congressional Oversight Panel created by Congress to monitor the bailout, the Bush Treasury Department overpaid by $78 billion of our money in the first ten purchases of those assets. Yet Geithner tells us "Congress acted quickly and courageously" in throwing that money at Wall Street without requiring any accountability. At the same time, there is still no commitment to directly help what Geithner admits are the millions of homeowners already foreclosed out of their homes, with millions more to come. The leaks from Treasury promise that $50 billion will eventually be allocated directly to helping homeowners, which is a day late and a dollar short in chump change compared to the trillion dollars that Geithner on Tuesday committed to the purchase of more bad bank debt.
The Geithner speech betrayed the buildup to it offered by President Obama in his press conference the day before. I was such a sucker I found myself cheering at almost every line, agreeing that Republicans acted with total irresponsibility in opposing Obama's plan to stimulate an economy that was wrecked on their watch. But then came the hangover reality of Geithner's talk. Instead of the promised transparency we were treated to yet another "trust Big Brother" hustle.
How wonderful that Geithner, who as head of the New York Federal Reserve was in on the first wasted $350 billion, now promises a brand new website to help us taxpayers follow the action. It means nothing, given that he specifically ruled out any of the serious means of holding Wall Street accountable.
The New York Times got it right: "the plan largely repeats the Bush administration's approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis." Geithner and White House economic czar Lawrence Summers won out over David Axelrod and other Obama advisers more loyal to the wishes of grass-roots voters; "as intended by Mr. Geithner, the plan stops short of intruding too significantly into bankers' affairs even as they come onto the public dole."
The word "dole" is usually applied heartlessly to welfare mothers sustained in their dire poverty by meager government handouts, not to the top bankers now ripping off the taxpayers. But as opposed to welfare mothers, who must survive stringent monitoring, the bankers will be largely self-monitoring. No wonder that welfare rolls, because of onerous eligibility rules, are not rising commensurate to the degree of misery out there. There is no such tough love for bankers.
Much has been made of the proposed $500,000 pay cap that applies only to the most senior executives, who, rest assured, have already salted away massive fortunes made while hustling unsuspecting consumers with teaser loans. But there is nothing from Geithner about replacing those top executives, who presided over the disintegration of financial institutions that the taxpayers must now salvage. Nor is there any "moral hazard" pain planned for the shareholders in those Ponzi-scheme companies of the sort reserved for ordinary folks losing their homes.
Believe it or not, I fully expected this morning to write a cheerleading column hailing Geithner's reversal of course. Surely the man who as head of the New York Fed sat idly by while the Wall Street giants he was supposed to be monitoring imploded would have learned the error of his ways. Otherwise why would Obama have appointed him?
I don't have the answer. The Obama of Monday's press conference, a president in the tradition of Franklin Delano Roosevelt, seemingly deeply feeling the average person's pain as he movingly speaks of the laid-off workers of Elkhart, Indiana, was absent from the next day's speech by his treasury secretary.
If, like me, you still get those chatty e-mails from the Obama campaign, it is time to remind them that we voted for the caring community organizer from the streets of Chicago and not some hack carrying water for the predators of Wall Street.