Patterico's Pontifications

5/18/2009

Shocker: Timmy Geithner still a mess at Treasury

Filed under: General — Karl @ 10:09 am

[Posted by Karl]

About as shocking as the gambling at Rick’s Cafe Americain:

While Geithner has taken dramatic steps to address flashpoints in the economy, the work of carrying out those policies has bogged down because critical decisions about how to do so aren’t being made, interviews with a broad range of federal officials show.

Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department’s top ranks. But some of the officials also cite the Treasury’s ad-hoc management, which is dominated by a small band of Geithner’s counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.

One of the department’s signature initiatives, considered vital for getting at the root of the financial crisis, aims at relieving banks of their toxic assets. But to those familiar with the program, it remains unclear who will decide some of the practical details, such as whether foreign firms will be allowed to participate in the funds that buy the assets. This uncertainty is slowing the rollout of the program, which in any case has proven daunting to design. Announced in early February, it may not launch until July, officials say.

If you thought the administration had resolved the issue of what American International Group execs should be paid, you thought wrong. Treasury is also yet to decide whether to pay ousted General Motors chief G. Richard Wagoner Jr. his $20 million severance package.

It might have been hoped that someone would be answering the phones at the Treasury Department by now, but perhaps this level of disorganization is not surprising in an administration whose head has virtually no experience running anything.

Aside from the issue of basic competence, the common thread running through the current batch of issues is the Obama Administration’s cavalier attitude toward contracts and the rule of law. The administration has had problems getting lenders to participate in the supposed keystones of its economic agenda — the Term Asset-Backed Securities Loan Facility and the Public-Private Investment Program — because lenders no longer trust that Obama and the Democratic Congress will not change the rules in midstream for reasons of political expediency. Geithner’s disorganized dithering only adds to the uncertainty that undermines economic recovery.

— Karl

Cross-posted at HotAir.

26 Responses to “Shocker: Timmy Geithner still a mess at Treasury”

  1. Uncharacteristically, I am forced to defend the Obama Administration. Please don’t make me do it again.

    It might have been hoped that someone would be answering the phones at the Treasury Department by now

    How do you know this? The story you cite is two months old.

    Amphipolis (fdbc48)

  2. funny, the main article link shows this:

    By David Cho
    Washington Post Staff Writer
    Monday, May 18, 2009

    seems pretty current to me….. what the 2nd link shows is that in two months Ear Leader and his minions have accomplish squat.

    redc1c4 (9c4f4a)

  3. I am pretty sure that this post is racist and homophobic. I am not sure exactly how, but you can bet your bottom dollar …

    JD (24122d)

  4. My critique was only of the claim that nobody is answering the phones.

    Don’t get me wrong – that was unacceptable two months ago. But two months ago is not by now.

    There is plenty to criticize. Let’s just not be sloppy about it if we want it to stick.

    Amphipolis (fdbc48)

  5. The country’s in the very best of hands.

    Techie (9c008e)

  6. well, with all the empty posts mentions, it’s obvious no one is answering those phones…. but obviously someone is splitting hairs.

    i’m just glad we elected the oh so smart, capable and experienced Ear Leader, instead of the bimbo who’s only back ground was successfully running the largest state in the union….

    redc1c4 (9c4f4a)

  7. Amphipolis,

    As quoted in the original post:

    Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department’s top ranks.

    Karl (f07e38)

  8. The conduct of Obama and company is inexplicable unless you assume that they don’t care much about running the country and are consumed by their grandiose plans for everybody. It seems to be all theory. At least Mussolini got the trains running on time.

    Mike K (2cf494)

  9. The administration has had problems getting lenders to participate in the supposed keystones of its economic agenda — the Term Asset-Backed Securities Loan Facility and the Public-Private Investment Program — because lenders no longer trust that Obama and the Democratic Congress will not change the rules in midstream for reasons of political expediency.

    Obama stating that he was the only one standing between these guys and the pitchforks, stirring up populist furor over executive bonuses that were 0.1% of a total bailout grant, and demonizing company investors on national TV probably had a lot to do with this too.

    And now that Chrysler and GM are cutting off roughly 25% of their dealers, despite all the bailout money the company recieved, it’s pretty clear that smaller businesses are going to end up getting shafted within these industries as well–my local rag reported that up to 100,000 people could be out of work as a result of the dealer shutdown.

    Expect a lot of stonewalling on this until the stimulus actually kicks in roughly a year from now, in time for the next election cycle. The administration and its supporters are sending out thoroughly mixed messages right now–on May 11, Christina Romer said that “the nation’s unemployment rate was likely to keep rising until 2010, even if the economy begins growing later this year,” yet just today, his budget chief said that the worst is supposedly over and “there are some glimmers of sun shining through the trees” (really, this is about as dumb as the “green shoots” meme). So which is it–the worst financial crisis since the Great Depression, or are we recovering? Oh, and in either case, why can none of this be attributed to the stimulus, since only 6% or so of the funds have been spent so far?

    What we see here is the administration throwing up a smokescreen on the economy and hoping things pick up in time for the 2010 elections. With unemployment rising ABOVE their predictions if the “stimulus” hadn’t been passed, they are essentially resetting the expectations to zero in order to trumpet ANY improvement as a sign of progress. This despite their original projections showed that the stimulus should have leveled off unemployment at 8% (it’s pushing 9% right now and bound to get higher). It’s ridiculously cynical, and would have (rightly) been trashed as such if Bush had done it.

    Even by briefly alleviating unemployment for a couple of years, that money is going to run out–where will it come from next? And the administration predicted that unemployment would drop to apx. 5% in 5 years regardless of whether the stimulus passed or not. So essentially, Obama has promised a bunch of make-work measures that will NOT provide steady employment, and is quickly alienating those who would invest large sums of money in the economy to provide long-term jobs. Not to mention the protectionism in the stimulus that is forcing companies like Duferco in Pittsburgh to lay off 80% of its labor-union workers.

    Another Chris (2d8013)

  10. Someone remind me again why Volcker agreed to sign on with this atrocity – other than posing as window dressing, his sage advice and past experience is not only being ignored, but insulted at this point as well. I wish he would stand up and start calling out these fools – his credibility is at stake, at least IMHO.

    Dmac (1ddf7e)

  11. In other words, Obama is spending all this monopoly money in a manner solely meant to get himself re-elected and keep the Democrats in control of Congress, not because he’s actually trying to fix the economy.

    You can take the ward heeler out of Chicago, but you can’t take the social engineer out of the ward heeler.

    Another Chris (2d8013)

  12. So which is it–the worst financial crisis since the Great Depression, or are we recovering?

    Can’t it be both? (sarc.) BTW, what the hell is Summers doing these days, aside from falling asleep during critical meetings?

    Dmac (1ddf7e)

  13. “America has a problem. There isn’t someone in the U.S. government that we can sit down with and have the kinds of discussions we’re having with the Chinese.”
    — Sergio Gabrielli, CEO of Petrobras, the state-controlled Brazilian oil company

    Our govt institutions in a nutshell…where both the nut and the shell apply. The Harvard and Yale mentalities that pervade DC and Wall Street wouldn’t be so bad, save that H&Y have gone so far off the reservation during the heydays of boom-on-boom and no insider left behind. No one knows how to make the Daddy decisions anymore, so ‘Govt’ has stepped in and filled the vacuum. A vacuum filling a vacuum precipitates exactly what we are facing now.

    allan (59ba38)

  14. Karl –

    I took you to mean that literally, since the link was to a literal account from two months ago of Treasury really not answering the phones.

    I suppose you were using the term figuratively, and using the link for emphasis. If so I get it now.

    Amphipolis (fdbc48)

  15. the common thread running through the current batch of issues is the Obama Administration’s cavalier attitude toward contracts and the rule of law.

    Of course, they’d never agree that is what they’re doing, just as the Bush Admin would never agree with the left’s claims that was what they were doing, and just as no Supreme Court Justice would ever agree that they were disregarding the Constitution in making a ruling. Everybody interprets the law in such a way so to support what they’re doing whether it be remaking the financial industry, fight terror or eliminating bans against sodomy.

    And you’re still focused on process, Obama (as Bush was before him, but in different areas) is focused on results… and the people could care less about process, so in a PR battle between someone offering results and someone spouting off about ‘rule of law’ and so on, guess who wins? The guy with the 60ish approval rating. You want to beat Obama? You need to rework your message.

    As to the status at Treasury, isn’t that a good thing? Think about how much bad they could do with a full staff.

    steve sturm (369bc6)

  16. so in a PR battle between someone offering results and someone spouting off about ‘rule of law’ and so on, guess who wins? The guy with the 60ish approval rating.

    I think you’re confusing “results” with “promises”. So far, the results of Obama’s policies haven’t lived up to his promises–in fact, it’s gotten worse, as the unemployment level shows.

    Of course people are going to approve of someone who keeps promising them sweets and treats and that they won’t have to pay for it. It doesn’t mean that their perception of the man matches the reality around them, though.

    Another Chris (2d8013)

  17. What results are you speaking of, steve? Outside of falling poll numbers, can you outline for us the positive results of any of these ideas Barcky has pushed?

    JD (a67da8)

  18. I didn’t say he has delivered results, his poll numbers are reflective of the promises he has made and the public’s belief that things will get better as a result of what he is trying to do.

    And the GOP gets some of the credit for his (still) high numbers. Instead of offering up their own ideas (i.e., promised results), they’re wandering around throwing around terms like ‘rule of law’ and so on… phrases that the public doesn’t understand and doesn’t care about. Given the choice between the guy ranting about ‘primacy of contract’ and the guy who promises to stabilize housing prices, is it any surprise that the public wants to go with the second guy?

    Example: instead of muttering about ‘unprecedented uses of executive power’ (or something like that) to describe Obama’s muddling in Chrysler and GM and AIG and so on, why hasn’t the GOP talked about how MORE people will end up on unemployment as a result of what he is trying to do, how car prices will go up as a result (or whatever) and offering up their own solutions? The GOP can’t win if they don’t offer up a plan of their own, they can only hope Obama screws things up bad enough that voters turn to the GOP out of spite, much as voters turned against the GOP in 06 and 08.

    steve sturm (369bc6)

  19. steve sturm, I think that doubling the national debt is going to be a “result” that Obama is going to be known for pretty quickly.

    SPQR (72771e)

  20. steve sturm,

    Per usual, you start from the assumption that my hobby is disributing or formulating GOP talking points, and work your way backwards. Clearly, it has not sunk in with you that your assumption is false. I do some posts giving an opinion on what I think the GOP might do to recover, but I’m pretty explicit about it in those cases. Here, I’m simply noting that the administration is working against its own purposes.

    Incidentally, competence might seem like a “process” issue to you, but the effect Hurricane Katrina (or the media version thereof) had on the Bush Admin suggests it has a nasty way of rearing its head with voters.

    As for lawlessness being in the eye of the beholder, I would note only that the eyes that matter here are not yours or mine, but those of the people Obama is counting on to make programs like the TALF and the PPIFs work. And those eyes don’t like what they see.

    Karl (e59f40)

  21. “…Obama (as Bush was before him, but in different areas) is focused on results……”
    Which so far, have been negligible; if not non-existant.

    AD - RtR/OS! (c02a3c)

  22. “they’re wandering around throwing around terms like ‘rule of law’ and so on… phrases that the public doesn’t understand”

    steve – Sort of like Obama campaigning on the slogan “Hope and Change?” What the hell did that mean anyway? Also, the phrase “rule of law” seemed very popular on the left when used to bash Bush, so what exactly are you talking about?

    daleyrocks (5d22c0)

  23. ‘Hope and Change’ was brilliant marketing, it was shorthand for whatever end result the listener wanted (get rid of Bush, have someone take of her mortgage, make the world love us again) – unlike ‘rule of law’ which is more of an abstract concept that flies over the head of most voters.

    And ‘competence’ usually falls flat as a campaign issue (ask Dukasis), it was only when it was connected to an end result that it resonated. BTW, I’ve long thought Bush’s sin was not in the substance of the federal government’s initial response to Katrina, but rather to the (typically) incompetent way he handled the P/R aspects (seemingly aloof and detached, praising someone who was out of touch, not putting blame on LA and city officials who had primary responsibility, not portraying the feds as coming to the rescue of the incompetent locals).

    And the doubling, tripling whatever of the national debt is also an non-important abstract, it only resonates if and when it has a negative impact on people.

    steve sturm (3811cf)

  24. so in a PR battle between someone offering results and someone spouting off about ‘rule of law’ and so on, guess who wins?

    OK, so far, so good – but then we have this:

    Hope and Change’ was brilliant marketing, it was shorthand for whatever end result the listener wanted

    So in your opinion the GOP should offer “results,” but also obfuscate whatever those “results” may in fact be composed of, because it’s all in the marketing. Somehow, I don’t think the MSM is going to allow that little fact to go unchallenged or unnoticed. You do realize that no one in the MSM ever challenged Obama on what his mantra of Hope and Change actually meant, yes? Sounds like another epic fail for the GOP if they follow that manual.

    Dmac (1ddf7e)

  25. And the doubling, tripling whatever of the national debt is also an non-important abstract

    I don’t believe that assumption is correct – despite the MSM’s incessant cheerleading on the stimulus packages, recent surveys show that the majority of US adults know that China owns most of the outstanding debt of our country at present:

    http://people-press.org/report/504/knowledge-update

    Yet you claim that no ones cares about this issue? Methinks you’re talking out of your hat here.

    Dmac (1ddf7e)

  26. And the doubling, tripling whatever of the national debt is also an non-important abstract, it only resonates if and when it has a negative impact on people.

    The Tea Party protests show it’s already resonating with some people.

    The One can’t cover the debt by taxing the rich, even if he confiscated all of the wealth of the top 5%, it wouldn’t be enough. The most likely way of getting out of that debt is the covert repudiation of inflation. But the Chinese (among others) is already worried about that.

    Thus the Chinese, who have been the major purchaser of Treasuries, are a lot less interested in buying our bonds. This means that the interest rate on bonds goes up, and that ripples. The Fed has had to step in and buy the long term Treasuries, making serious inflation all the more likely.

    LarryD (243b3d)


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