Ethics Under TARP

Ethics Under TARP

As government takes a larger role in business, political skills may matter more than business acumen. And ethics? Not so much.


As the last of the delirious millions were clearing out of Washington and returning to the new post-racial, post-industrial, post-gender and now post-employment America, Timothy Geithner, President Obama’s choice for secretary of the treasury, was struggling to save his reputation.

Geithner was being asked to explain why he had not paid more than $34,000 in Social Security and Medicare taxes while working at the International Monetary Fund in the early years of this decade. Since the fund had given him money expressly for this purpose and had repeatedly admonished him to pay his taxes, Geithner was in something of a spot. Geithner offered explanations that Republican Senator Jon Kyl of Arizona called “incomprehensible.”

Geithner said he was sorry, but the impression hung in the room that he is the kind of guy who pads his expense account and sneaks stationery home from the office. Given the enveloping economic catastrophe and the popularity of the new president, the Senate was not about to refuse to confirm Obama’s choice for this hugely important position.

How well Geithner can fill it remains to be seen. Although he was the president of the Federal Reserve Bank of New York and in the thick of every major economic decision made in the past couple of years, his answers to questions about what had happened and how were shallow, vague and unhelpful. Apparently more of a financial technocrat than a pathfinder, it will be up to others in the administration to find a way.

As Geithner flopped and flipped, the news came through that the sick giant Citigroup was to get a new board chairman. Since the government is destined to pump yet more billions into that bloated, dying behemoth, the chairman is virtually a public official.

The new man, Richard Parsons, is one of the world’s most accomplished smoothies. His business credentials may, however, leave something to be desired. As a longtime head of Time Warner, he presided over the company’s continuous downward slide. He was also a Citibank board member and if he did anything to try to stop its onward rush toward destruction, it is nowhere recorded.

But as government takes a larger role in business, political skills may count for more than business acumen. Parsons has them. In the past they have been used to the benefit of Republicans, going back to the time of New York Governor Nelson Rockefeller and President Jerry Ford, and forward as recently as Rudy Giuliani. Yet Parsons has been nimble enough to turn up on Barack Obama’s transition team. Universally liked, he seems to be a man for all parties, but it remains to be seen how well this amiable lawyer can weather all seasons.

Using the argument that revealing who got the money would undermine “confidence,” the indispensable elixir of prosperity, the Republicans and the financial people have refused to give a close accounting of who has gotten the money already. With more billions to be distributed to our stricken financial institutions, it is more than a mere matter of ethics that they not be handed out on the basis of Richard Parson’s winning personality.

Nor should they go to institutions because powerful politicians would have it so. It appears that Barney Frank, the chairman of the House Financial Services Committee who started his career as a reformer, may have switched vocations, so to speak. The Wall Street Journal reports that a Boston bank, OneUnited, may have gotten money thanks to Frank’s power.

class=blockquote”> in December OneUnited got a $12 million injection from the Treasury’s Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.

class=blockquote”> Mr. Frank, by his own account, wrote into the TARP bill a provision specifically aimed at helping this particular home-state bank. And later, he acknowledges, he spoke to regulators urging that OneUnited be considered for a cash injection.

OneUnited is not the only institution suspected of getting money on the basis of influence rather than economics. As the word has gotten around that anybody with half a brain can get in on the goodies with the right connections, the lobbying industry is on the move.

The Journal writes, for example, that “Arizona’s banking superintendent, Felecia Rotellini, says she is teaming up with local bankers and state legislators who plan to start lobbying Arizona’s congressional delegation for help. ‘Some states are getting better treatment, and we just want it to be a level playing field,’ Ms. Rotellini says. ‘I think it’s just a question of advocacy. It has to be a congressional voice.’ ”

With every Tom, Dick and Harriet drawing a bead on the US Treasury, Timothy Geithner has yet to show he is strong enough and tough enough to bar the door.

Thank you for reading The Nation!

We hope you enjoyed the story you just read, just one of the many incisive, deeply reported articles we publish daily. Now more than ever, we need fearless journalism that moves the needle on important issues, uncovers malfeasance and corruption, and uplifts voices and perspectives that often go unheard in mainstream media.

Donate right now and help us hold the powerful accountable, shine a light on issues that would otherwise be swept under the rug, and build a more just and equitable future.

For nearly 160 years, The Nation has stood for truth, justice, and moral clarity. As a reader-supported publication, we are not beholden to the whims of advertisers or a corporate owner. But it does take financial resources to report on stories that may take weeks or months to investigate, thoroughly edit and fact-check articles, and get our stories to readers like you.

Donate today and stand with us for a better future. Thank you for being a supporter of independent journalism.

Thank you for your generosity.

Ad Policy