Geithner Takes Responsibility, but There is Still No Evidence He Lied or Acted Improperly

To me the AIG or more accurately AIG’s Financial division bonus scandal is part detective story, part sociological phenomenon ( because of the reaction it) and has more political implications then serious  financial repercussions – what percent of the original TARP at $700 billion is $160 million. The median income in the U.S. is around $54,000 a year so one can certainly understand the average Americans disgust at the idea of using tax payer funds to pay some of the people that caused the need for a bail-out to go back and fix the problem. That’s just populism 101. Yet it has turned into a circus and while President Obama’s recent statements about taking responsibility and  realizing  that most of the bonuses will be recovered, have calmed most, the controversy and the blame game haven’t ended yet. It would be nice to know exactly who to blame, but even with some news the last 24 hours, the majority of the blame still goes back to former Treasury Secretary Paulson. This is the prime piece of evidence, quoted in several places that supposedly puts Treasury Secretary Geithner at the center of the storm, from the WSJ ( the link itself is important because at least two big name bloggers have the wrong link up),

The Obama administration had not tried to hide its concern about the moves to clamp down on executive compensation. Both Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers lobbied Mr. Dodd to make changes.

It is an an anonymous statement. Who said it and on what evidence did they make that claim. This is something that anyone of adult age should be able to relate to – have you ever been falsely accused of something. It mattered then and it should matter now, who said what, based on what facts. In the paragraph following from the same link,

Administration officials said the Treasury didn’t suggest any language or say how the amendment should be changed. They said they noted legal issues that could likely lead to challenges, but was the end of their involvement. The official said Mr. Dodd and Congress made the final changes on their own.

Senator Dodd has changed his version of events for the third time,

On Tuesday, Dodd denied that he had anything to do with adding the language.

“When I left the Senate, it was not in there. So when I wrote the language, there was no such language like that,” he said then.

But, saying his previous comments had been misconstrued, Dodd said Wednesday that he added the exemption after getting pressure from the Treasury Department.

“I agreed reluctantly,” Dodd said. “I was changing the amendment because others were insistent.”

Dodd, a Connecticut Democrat, told CNN’s Dana Bash and Wolf Blitzer that Obama officials pushed for the language to an amendment designed to limit bonuses and “golden parachutes” at those companies.

He said Wednesday that the “grandfather clause” language “seemed like innocent modifications” at the time.

But that change ultimately allowed AIG to go ahead with doling out $165 million in bonuses.

So Dodd says he put modifications to executive compensation into the bill, but took them out from some unnamed source at the Treasury, “Dodd said he did not speak to high-ranking administration officials, and the change came after his staff spoke with staffers from Treasury”.  Other then resorting to the ‘buck stops with Geithner’ because has been the boss for almost fifty days, there isn’t a smoking gun that Geithner had a hand in shaping the Senate version of the bill that specifically had to do with AIG bonuses. The House had its own ideas. The bill went to conference and irregardless of the administration’s supposed input or some “staffers” from Treasury, it came out without any retroactive changes to compensation obligations that Paulson had agreed to.

According to a transcript of the Tuesday interview, Dodd was asked about an executive-compensation provision “that exempts everything prior to February 11, 2009 — any contracts prior to that date.”

He said that language was not in the version of the bill that left the Senate and that he was not one of the negotiators who hammered out a compromise between the House and Senate versions of the plan.

“I can’t point a finger at someone who offered a change at all,” he said.

Asked whether he later had been able to figure out who added the language, he said, “I really don’t know.”

In Wednesday’s interview, Dodd never said his Tuesday comments had been misunderstood.

“Going back and looking, I apologize,” he said when questioned about his words from the day before.

Now, according to Dodd the bill did not have any modifications going into conference ( conference is where the Senate and the House work out the final version of a bill. There would have been officials and staffers from both parties looking over the final bill – Where is the media on asking them what they knew and when they knew it). Dodd, while guilty of a faulty memory, is still not the bad guy here, though through the media echo chamber that detail is likely to be lost. It is a fact at one point he wanted to modify the compensation provisions to executive bonuses that were agreed to in haste and insisted upon by Paulson and Republicans in the first TARP, GOP Opposes Pay Limits On Bailed-Out Bankers

President Obama has proposed capping compensation for executives at banks that take taxpayer bailout money at $500,000. Republicans hate the idea — a position puts them uncomfortably on the side of people currently about as popular as child-porn producers and subprime mortgage brokers.

Senate Minority Whip Jon Kyl (R-AZ) blamed the “tone deaf” bankers for creating the political environment that allows Obama to call for a cap.

“Because of their excesses, very bad things begin to happen, like the United States government telling a company what it can pay its employees. That’s not a good thing in America,” Kyl told the Huffington Post.

“What executives have done is troubling, but it’s equally troubling to have government telling shareholders how much they can pay the executives,” said Sen. Mel Martinez (R-FL).

Sen. James Inhofe (R-OK) said that he is “one of the chief defenders of Obama on the Republican side” for the president’s efforts to reach across the aisle. But, said Inhofe, “as I was listening to him make those statements I thought, is this still America? Do we really tell people how to run [a business], and who to pay and how much to pay?”

Going back to that oft quoted WSJ paragraph, anyone else notice a stark difference. Obama was publicly on the record for capping compensation, yet suddenly in 2009, WSJ’s unnamed sources are saying the administration – the White House itself and Treasury lobbied against Dodd. The media, pundits and many bloggers are pratically snarling when they quote Secretary Geithner saying,

“I was stunned when I learned how bad this was on Tuesday [March 10],” Geithner said. “I shouldn’t have been in that position, but it’s my responsibility and I accept that.”

Conflicting reports from WSJ that involve anonymous sources versus what probably has happened in the rush for an understaffed Treasury department’s boss says. I’ve worked for large companies and while I cannot know exactly what is going on in Senator Dodd’s office or at the Treasury Department, I can understand how a particular subset of issues – exact bonuses – would be handled by staffers and some fine print would not be on the tip of the boss’s brain. It certainly is now – Geithner has always been a financial wonk –  he is now on the front lines fully aware of the political implications side of his new job; so all the outrage maye have had a positive effect in that regard. Thsi WaPO article manages to both damn and praise Geithner, thus strange in being one of the best defences of Geithner,

Paulson left for Washington. But Geithner stayed up all night with officials at the New York Fed to examine AIG’s situation. He discovered not only an enormous number of complicated trades, estimated at $2 trillion, but that AIG had backed retirements funds across the nation. He also realized that a collapse of AIG was imminent, and that the fallout would ripple across the banking system, sources familiar with the episode said.

[  ]…During this period, Geithner’s primary concern was keeping the financial system from collapsing, not what firms were paying their employees, a source said. Other staff members at the Fed and Treasury were in charge of the compensation issues and only briefed Geithner, two sources said. Once nominated for the Treasury post in December, Geithner recused himself from affairs related to specific firms.

At least we have “two” whole unamed sources here. The New Republic writes in a blog post,

I mean, however you feel about what Geithner knew about the bonuses and when he knew it, you have to concede that his far bigger concern throughout this time was preventing the global economy from self-immolating. As a substantive proposition, how much would we even want a Treasury secretary to focus on $165 million in bonus money while there were hundreds of billions of dollars in bailout money flowing to AIG and other companies? Doesn’t seem like that would be a particularly good use of his time beyond a certain point.

The more I read about the chronology of events and who said what it keeps coming back to a kind of blanket of condemnation based primarily on the original WSJ story that claimed Obama and Geithner both pressured Dodd to leave executive compensation alone and simply disbelief that Geithner couldn’t have known about the bonuses until the end of February or March 10th – those 10 days are pretty meaningless sans actual proof otherwise. people generally lie for a reason. In this case it would be to avoid responsibility, but geithner is taking responibility anyway, so that angle on the story does not work out. What Paulson did and why he did it is not getting enough attention, but neither is  Federal Reserve Chair Ben Bernanke,  Bernanke Dodges the Bullets

First, let me remind you of the facts. Governor Bernanke served on the Academic Advisory Panel at the Federal Reserve Bank of New York from 1990-2002. In other words, Ben Bernanke was there as the Federal Reserve presided over, and, I would argue encouraged, the inflation of the biggest Credit Bubble in history.

If he had challenged the dominant orthodoxy of the Fed at the time, then I vouch he would not have become a member of the Board of Governors of the Fed from 2002 to 2005.

In June, 2005 he was appointed chairman of President Bush’s Council of Economic Advisors. In 2006 he was appointed by President Bush as Governor of the Federal Reserve with these words: ‘he is the right man to build on the record Alan Greenspan has established”.

In other words over the period 2002 to 2009, Governor Bernanke has had a key and highly influential role as one of the ‘guardians of the nation’s finances’ on the board of the Federal Reserve.

Over this same period, and under the watch of the Federal Reserve, AIG accumulated massive, and historically unprecedented liabilities — a truly incomprehensible $62 trillion of liabilities.

HuffPo has a video up that Geithner did with CNN about what, once again, who knew and did what when, Geithner: Treasury Pushed For Bonus Loophole (VIDEO)

GEITHNER: On Tuesday I was informed about the full scale and scope of  these specific bonus problems. And again, as soon as I did — but, you  know, it’s my responsibility, I was in a position where I didn’t know    about those sooner, I take full responsibility for that. The people doing this, the Fed and the Treasury people, are working  very closely together. They’re doing — dealing with an enormous set of complicated problems.

Tuesday would be March 10th. Treasury staff obviously knew about the bonuses before then. He speaks up for Dodd which kills the administration throwing Dodd under any buses meme.

GEITHNER: Let me just start by saying that Chairman Dodd has played an enormously important leadership role in this and he’s doing the right  thing in trying to make sure that the assistance we provide don’t go to benefit people that shouldn’t benefit from these things. And I am  enormously impressed by the importance of what he’s trying to do in this case.

Notice there is no Bush administration/ FEMA blame shifting. Geithner is in take responsibility mode. He’s not saying his staff, he is saying we including himself.  For eight years many Americans ranted about the lack of truthfulness and accoutibilty in the White House. This is what it looks like – though I reserve some caveats in regards to the DOJ and civil liberites issues.

VELSHI: Do we know who in Treasury had this conversation with whomever on the banking committee?

GEITHNER: Treasury staff were working Senator Dodd’s staff throughout  this process. Again, that’s part of the legislative process.

VELSHI: But you weren’t involved in that directly?

GEITHNER: I did have with other officials some conversations with    Chairman Dodd as he was going through this process but other  provisions.
VELSHI: So not about this particular one. It wasn’t you telling …
GEITHNER: No, but I’m not sure that’s relevant because Treasury staff did express concern about whether this provision was vulnerable to legal challenge.

This is the part where, thoroughly trained in cynicism courtesy the Right’s antics for eight years, we’re all supposed say yea sure. The original TARP did have negotiated provisions in it for compensation – obviously no one was expected to work for free. This is part of a Treasury Department news release for October 14, 2008, Treasury Announces Executive Compensation Rules Under the Emergency Economic Stabilization Act

Treasury holds equity issued under this program. The financial institution must meet certain standards, including: (1) ensuring that incentive compensation for senior executives does not encourage unnecessary and excessive risks that threaten the value of the financial institution; (2) required clawback of any bonus or incentive compensation paid to a senior executive based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; (3) prohibition on the financial institution from making any golden parachute payment to a senior executive based on the Internal Revenue Code provision; and (4) agreement not to deduct for tax purposes executive compensation in excess of $500,000 for each senior executive. Treasury is issuing interim final rules for these executive compensation standards.

Those are very general terms, but still enough to see where the compensation language could get deep fast and thus a very sensible that Treasury staff express concerns that legislation be passed that would not get snarled up in legal challenges. How would the villagers feel if there would have been a legal way for those recipients of AIG bonuses to sue for them plus legal costs.

Update: The NYT just filed this report, Many in Government Knew Weeks Ago About A.I.G. Bonuses

The question was direct and prescient. Representative Joseph Crowley, Democrat of New York, asked the Treasury secretary in an open hearing what could be done to stop American International Group from paying $165 million in bonuses to hundreds of employees in the very unit that had nearly destroyed the company.

Timothy F. Geithner, the Treasury secretary, responded by saying that executive pay in the financial industry had gotten “out of whack” in recent years, and pledged to crack down on exorbitant pay at companies like A.I.G. that were being bailed out with billons of taxpayer dollars.

The exchange took place before the House Ways and Means Committee on March 3 — one week before Mr. Geithner claims he first learned that the failed insurance company was about to pay a round of bonuses that have since caused a political uproar.

A Treasury spokesman, Isaac Baker, said in a statement on Thursday night, “Although Congressman Crowley raised the issue of the bonuses two weeks ago, Secretary Geithner was not aware of the timing or full extent of the contractual retention payments or the other bonus programs until his staff brought them to his attention on March 10.”

Let’s say that Geithner is just determined to lie about that now seven day gap. He really did know every dot and dash detail on March 3rd rather then a general knowledge that AIG and other bail-out recipients were getting bonuses( as noted in the TARP news release from last year). So what. This isn’t missing e-mails to cover up anything. This isn’t using the Department of Justice as a wing of the Republican party. This isn’t talking about fashion choices while people were dying in New Orleans. This not lying us into a war based on trumped threats to our national security. Or letting veterans of Iraq be sentenced to squalid conditions at Walter Reed Hospital .

Obama: DC can point fingers, I’ve got a job to do

I know Washington’s all in a tizzy, and everybody is pointing fingers at each other, and saying it’s their fault, the Democrats’ fault, and the Republicans’ fault. Listen: I’ll take responsibility. I’m the President.

We didn’t draft these contracts. We’ve got a lot on our plate. But it is appropriate when you’re in charge to make sure that stuff doesn’t happen like this, so we’re going to do everything we can to fix it.

So for everybody in Washington who’s busy scrambling to try to figure out how to blame somebody else, just go ahead and talk to me, because it’s my job to fix these messes even if I don’t make them.

But what’s just as important is that we make sure we don’t find ourselves in this situation again, where taxpayers are on the hook for losses in bad times, and all the wealth that’s generated in good times goes to those who are at the very top of the income ladder.

The Fed, Pitchforks and Cleaning Up Someone Else’s Mayhem

How the Fed Failed to Tell Obama About The Bonuses

Federal Reserve officials knew for months about bonuses at American International Group but failed to tell the Obama administration, according to government and company officials, exposing problems in a relationship that is vital to addressing the financial crisis.

[  ]…”I was stunned when I learned how bad this was on Tuesday [March 10],” Geithner said. “I shouldn’t have been in that position, but it’s my responsibility and I accept that.”

It doesn’t seem to matter in the rush to see who can be the most outraged, but people seem to be unaware or confused about AIG’s bail-out funds. They have received two. The original bail-out was in TARP under the Bush administration ($150 billion) – in that bail-out, the largest of the two, negotiations over bonuses were not even considered – it was reported later that AIG bonuses would total $400 million. That bail-out was revised ( note the contrast in faux Republican outrage between now and then – they voted for TARP and never accused anyone in the Bush administration of not being up to the task of handling the money – even when Paulson changed course and suddenly decided to amend the AIG funds to buy $40 billion in AIG shares. Paulson wasn’t in over his head, but Geithner is? In early March of this year AIG got another chunk of fed assistance to the tune of $30 billion in government guaranteed credit. Why is Geithener or Dodd for that matter being held responsible for a bail-out whose conditions were dictated by a previous administration. Maybe I’m missing something, but TIME’s peice

“Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming,” a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, “Everybody knew that [AIG] had a retention issue.”

becomes somewhat less urgent when we remember that the bonuses were part of a package – a contract negotiated by a combination of Fed Charman Ben Bernake and former Tresury Secretary Hank Paulson. The details of the Wall St rescue package are complex.  Yes current SOUST Timothy Geithner, was at the time head of the Federal Reserve in New York. Putting that fact out is like saying you’re resposnible for decisions made on the 10th floor because you’re on the 9th floor and have daily contact with those guys.

Last week, Hank Paulson — who bears responsibility for the crisis in numerous ways — demanded that $700 billion be transferred to him in order to purchase toxic assets from his Wall St. friends, and while there was much howling of outrage in many quarters, no other framework was ever considered.

(3) Public opinion is largely ignored, as always, and public anger is placated through illusory, symbolic and largely meaningless concessions. Much is being made over the allegedly strong oversight provisions to limit the Treasury Secretary’s power, accomplished through the creation of two oversight panels — one that is composed of 5 administration officials (including the Treasury Secretary himself, the Federal Reserve Chairman and the SEC Chairman — the definitive foxes guarding the hen house), and another that is appointed by Congress but which — as is true for everything Congress touches — has little real authority over what is done.

Identically, executive compensation limits — used to bestow the plan with its populist bona fides — are minimal and extremely limited. Worse, the public is being told that the financial services industry must pay for any losses to the Treasury still outstanding after five years, but the bill requires nothing of the sort, simply requiring that the president “propose” a plan for recoupment, not that Congress enact any such plan.

And, most of all, while not as absolute as it was in the original Paulson proposal, the Congressional plan still vests extraordinarily vast and centralized power in the Treasury Secretary — just as Paulson demanded. As the NYT put it this morning: “During its weeklong deliberations, Congress made many changes to the Bush administration’s original proposal to bail out the financial industry, but one overarching aspect of the initial plan that remains is the vast discretion it gives to the Treasury secretary.”

We’re in the very tedious though potentially politically damaging who said what and when did they say it stage. Liberals that don’t like Geithner – which probably comes from an overly protective and unnecessary instinct to protect President Obama – seem to have already made up their minds. Republicans, those actual pols that just voted for a $700 bail-out without oversight are like wingless chickens trying to get some political traction. The right-wing pundits – which I’ll get back to – have fallen off the faux populist tea wagon to defend the bonuses. To reintegrate, anyone that has kept up with the news knew that AIG, and Freddie Mac and Merril Lynch for that matter, were going to get compensation and bonuses. We knew that AIG’s total bonuses were going to be in the $400 million range. Why this time-line would cause any heated debate becomes odd in that light,

March 10 Geithner finds out about impending bonuses.

March 11 After 6 p.m., Geithner calls AIG CEO Edward Liddy to express outrage and says the bonus payments are unacceptable and Liddy must go back and renegotiate. Geithner and Treasury lawyers look for legal solutions to avoid paying the bonuses.

March 12 Geithner informs the White House about the bonuses. Later in the day, senior aides tell President Barack Obama. Geithner and Treasury lawyers keep looking for legal avenues to avoid paying the bonuses.

March 13 Geithner and Treasury lawyers still seeking a legal way out. Geithner speaks with Liddy again and after some back and forth, AIG agrees to modify the bonuses and recoup the money in $30 billion AIG restructuring agreement. Geithner then asks Liddy for a letter to codify the changes.

March 14-15 Following the March 13 deadline, Treasury attorneys look for a legal way to recoup the bonus payouts. On the evening of March 15, Obama asks the economic and legal team to intensify efforts to find ways to recoup the bonuses.

So Geithner didn’t know the specifics of page 310, paragraph four, section two where it says oops, some executive bonuses to the tune of $116 million are due for payout. TIME says no, Geithner learned about the bonuses or at least some at Treasury learned about them on Feb. 28. We now know that because of contractual entanglements the bonuses couldn’t be simply canceled, so even if TIME’s newest timetable is correct, what difference would that 12 days make in practical terms. There aren’t any facts I can find to justify not believing him and it turns out, the issue seems to contain more symbolic impact, then actual to be actual fodder for the level of outrage it is getting, in the context of the original bail-out negoiations under another administration, by another Treasury Secretary. Amendments to the original bail-out did take place and the administration, according to The Hill had knowledge of provisions to restrict executive bonuses,

Administration officials fear that the congressional provision will still allow multi-million dollar paychecks, as long as they aren’t called bonuses, because it has no limit on base pay.

But most of the administration’s concern stems from the Dodd’s move to trump Obama’s compensation provisions by seeking more aggressive restrictions.

Dodd is not backing down. In an interview with the AP, Dodd said his provisions are needed, especially if Obama asks Congress for more money to bolster the financial sector.

“It will never happen as long as the public perceives that there are people getting rich,” Dodd told AP. “Save their pay or save capitalism.”
Despite the White House misgivings about the compensation limits, they appear to be getting something much of the rest of the bill lacks — bipartisan support.

Republican Sens. Richard Shelby of Alabama and Lindsey Graham of South Carolina both voiced support for the provision during Sunday morning television appearances.

“We should protect the taxpayers here. And I believe this provision in the stimulus bill is going in the right direction, as far as protecting the taxpayers,” Shelby said on CBS’s Face the Nation.

Dodd has said the administration wanted to loosen restrictions on executive bonuses and on that he appears to be correct. Though he hasn’t helped his own ppolitical future by hedging back and forth on details. After the last week this column from WaPO does seem funny in context, The Costs of Bailout Rage

Could we put down the pitchforks for just a moment and have a reasonable discussion about the bonuses at American International Group?

No, I didn’t think so. Here goes anyway.

I get the outrage. It’s galling to pay $165 million to a bunch of wealthy traders to clean up a mess that they, or at least their company, made.

Another point being lost in the is that some of these executives that received bonuses are there to wade through the mess left for the last two years plus. Many AIG financial services exces have left the company.

“This is a corporation that finds itself in financial distress due to recklessness and greed,” the president said on Monday. “Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?”

Well, because in the short run, hammering the AIG employees to give back their bonuses risks costing the government more than honoring the contracts would. The worst malefactors at AIG are gone. The new top management isn’t taking bonuses. Those in the bonus pool are making sums that for most of us would be astronomical but that are significantly less than what they used to make. Driving away the very people who understand how to fix this complicated mess may make everyone else feel better, but it isn’t particularly cost-effective.

It is all “galling”, but the mistakes that the new administration has made seem to be more appearances and slow response then of actual substance, AIG Bonus Scandal—Bernanke and Fed Signed Off

Testifying before a House Financial Services subcommittee [2], Liddy said all AIG’s decisions have been made in conjunction with the Federal Reserve and agreed that Bernanke had signed off on the bonuses.

Subcommittee members expressed surprise at the acknowledgment. Rep. Paul E. Kanjorski (D-PA) [3] in particular showed his frustration [4] (PDF), referring to his efforts over a two-month period to work with AIG to address the bonus issue.

Oops, in the who knew what when game this Congressmen knew and so would all the Republicans and Democrats on his sub-committee. That doesn’t reflect badly on them as much as reflects how the bonuses have taken on a life of their own, a bonus octopus in which  people are actually arguing over 12 days and agreements that have changed over the course of a year. Also worth mentioning is that letting AIG go down the tubes would hurt some of the working class that many on every side say they care about,

The government’s ongoing willingness to stand behind AIG’s debts is critical to the health of the insurance companies, according to rating agencies AM Best and Standard & Poor’s.

We wrote earlier [5] that, without the government’s backing, those companies are at risk of further rating downgrades, which could, in an extreme case, compromise the businesses.

AIG’s insurance subsidiaries cover 38 million life and retirement policies for Americans, are the second-largest holders of municipal bonds, and insure 21,000 medical providers, according to company documents.

MyDD has a post up defending Secretary Geithner and President Obama, well worth reading the whole post, In Geithner We Trust

As the New York Times finds Secretary Geithner is “shouldering more crises on his slight frame than most Treasury secretaries ever have.” And I think it relevant to note that he is doing so without the usual complement of Treasury assistants because of Administration delays in vetting potential nominees and due to candidates who have withdrawn. In short, Mr. Geithner is not just the quarterback right now but the wide receiver, the running back and the offensive line doing the blocking and tackling.

Let’s also be cognizant of the task at hand and difficulty of the moment. As the President noted in his defense of the Secretary on the White House lawn before setting out for California, “there has never been a secretary of the treasury, except maybe Alexander Hamilton, right after the Revolutionary War, who’s had to deal with the multiplicity of issues that Secretary Geithner is having to deal with — all at the same time.”

As Charles Lemos points out letting Geithner go would undermine an already shakey financial sector. Then who are you going to get that, guaranteed, will have to shoulder their share of monthly outrages. “The Secretary and the President deserve the benefit of the doubt and the gift of time,” It is not Geithner’s job or President Obama’s job to just fix this crisis, it is their enormous task to fix the decades of bone headed econmic policy that got us where we are. The WSJ published some economists views on where we’re headed and they see the light,

Economists and others weigh in on the Federal Reserves decisions to buy Treasurys and increase purchases of other securities.

* This is a huge step forward, which we have thought inevitable for some time but did not expect to see in the statement today ……Ian Shepherdson, High Frequency Economics

* The largest benefit may come in the form of lower mortgage rates,….Nomura Global Economics

* …This could represent a powerful source of stimulus for the household sector of the economy. In 2008, the average mortgage rate on the outstanding stock of loans was about 6.50%. So, if the Fed brings 30-yr fixed rate mortgages down to 4.50% and all homeowners are able refi, the aggregate permanent cash flow savings would be on the order of $200 billion per year. –David Greenlaw, Morgan Stanley

This is some serious worry, given Fed’s actions, that they could acclerate inflation, but only one seems to think we’re on the completely wrong track.

More context for those $160 million in AIG bonuses, Cuomo Wins Ruling to Name Merrill Bonus Recipients Merrill employees recieved over $3 billion in bonuses and lets not forget what Iraq cost.

City of Tampa Skyline wallpaper

The Blame Game: AIG, Dodd, Geithner and How to Play Circular Firing Squad

AIG, the bonuses, The Obama administration, Senator Chris Dodd, Tresury Secretary Geithner. Who said or did what. Who is responsible for what and who isn’t. While the story got its boost into the major headlines from a few bloggers, it really seems to have taken off with this story from the NYT, A.I.G. Planning Huge Bonuses After $170 Billion Bailout

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to A.I.G.’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Mr. Geithner last week pressured A.I.G. to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

Firedoglake zeroed in on one paragraph as Glenn Greenwald at Salon echoed some simlar sentiments,

As Geithner tries to get out of the way of the AIG bonus train wreck, it looks like the designated sin eater is going to be Chris Dodd:

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place. (NYT)

So Treasury says Chris Dodd did this? In a word. . . no.

As both FDL and Glen note Dodd has tried to place limits on bonuses and compensation regardless of when they were promised as a condition of receiving bail-out money. One can understand the rabid Right throwing Dodd (and Barney Frank’s name) around, they’re both the Right’s scapegoats for the housing crisis. Dodd makes an especially prime target of right-wing spin and media duplicity because Republicans see him as vulnerable. Dodd has apparently received political donations from AIG in the past, as have many Republicans. Its the oldest political propaganda game in town, try and tie things together, label it clearly a case of corruption, but in fact there is no connection to date. Dodd’s political donations didn’t influence his decisions toward AIG and bail-out restrictions. That is a very obvious and verifiable part of the Congressional Record. Has Senator Dodd acted inappropriately in other AIG matters previous to the TARP bail-out requested by the previous administration – maybe, but the Right has been long on accusations and innuendo while short on facts – once again the Right believes if they repeat accusations enough that magically become the truth.

The other is this phrase in the report, ” administration official said the Treasury Department” – that is the take off point for accusing the administration of throwing Dodd under the proverbial bus. That seems a little thin. If the report has actually identified the spokesperson as Geithner or some other official by name it would make the administration blames Democratic Senator meme much more damning then it seem to appear as I write this, anyway. Even if the administration, not some low ranking office flak, is laying blame off on Dodd, the story is framed in such a way that while Dodd shouldn’t be taking the blame, the administration per se hasn’t acted badly – more an annoying and perplexing lack of communication. This timeline from Jake Trapper shows why,

How the Obama administration was caught flat-footed by this controversy dates back to last Fall, when the New York Federal Reserve Bank — then run by Geithner — stepped in to give AIG a high-interest loan for $85 billion to help prevent the company from going under — which Lehman Brothers was doing at the time. As part of the deal, AIG CEO Robert Willumstad was replaced by the new CEO, Liddy.

In late October, the $700 billion Troubled Assets Relief Program passed Congress, which includes rules about executive compensation but nothing about retention bonuses.

In November, the Fed and Treasury Department soon began pumping more money into AIG — $40 billion, to take down the $85 billion credit facility set up by the Federal Reserve Bank of New York.

At this point, an Obama administration official says, Treasury officials generally became aware that AIG had put retention programs in place, but whom they were for and the extent of them were unknown. The New York Fed began studying the compensation policies on the books — while also making efforts to save banks and rescue the economy. But by then Geithner’s nomination was pending and he had recused himself from dealings with AIG.

[   ]…AIG provided information about the company’s myriad compensation packages to the New York Fed, but officials described the information as extremely complex and not easily understood. AIG had more than 100 compensation policies for more than 116,000 employees throughout the world.

In January and February, officials of the Federal Reserve Board, and the Federal Reserve Bank of New York began working on an additional $30 billion support package to prevent an AIG downgrade. On February 23 and 24, government officials were finalizing the details of the USG support package for AIG

Three days later, on March 5, New York Fed officials forwarded to the Treasury Department a summary of AIG’s bonus and retention payment issues, including details of the retention program for officials of the Financial Products. This information included that $165 million in payments were expected that very month, as well as the fact that the contracts were in place in the first quarter of 2008, and so not covered by the limitations in the stimulus bill as articulated by an amendment to the stimulus bill offered by Sen. Chris Dodd, D-Conn.

Now Secretary, Geithner was probably aware of the general direction the bail-out was taking, but he seems to be telling the truth when he says he did not learn of the bonus package specifics to be paid out until March 10 and called Liddy the next day. In exchange for the next payment of TARP funds, Liddy has agreed to reduce compensation for the top 47 company executives, to tie any future bonuses to performance and try to recoup the money. There is something a little bizarre to the recovery funds from AIG – we, the government own about 80% of the company. This bonus fiasco is relatively small compared to other issues involving AIG’s financial arm – the one that created these very creative derivatives. There has been plenty of things done by the government and the private sector over the last eight years to be outraged about. AIG bonuses deserve to be on the list, but not anywhere near the top , Pin AIG woes on Brooklyn boy: Joseph Cassano walked away with $315 million while company staggered

In our fury over the bonuses at AIG, we should not forget the PIGs there who pocketed millions while endangering the global economy.

At the top of the list is 54-year-old Joseph Cassano, a Brooklyn cop’s kid made good who went oh so bad.

As head of the Financial Products unit, Cassano racked up billions of losses while assuring investors it was nearly impossible for his unit to lose.

“It is hard for us, without being flippant, to even see a scenario within any kind of [rhyme] or reason that would see us losing one dollar in any of those transactions,” he told investors.

Before he was finally fired last March, Cassano pocketed $280 million in cash and an additional $34 million in bonuses.

Under a “retirement” agreement marked “confidential,” Cassano also got a $1 million-a-month “consulting fee.”

AIG subsequently cut off these payments, but Cassano still walked away with more than $315 million while the company staggered under $440 billion in liabilities. Taxpayers had to pour in $170 billion in bailout money.

Putting the AIG bonuses a little lower on my outrage list is worlds away from new right-wing  they deserves bonuses dammit tho Glenn Beck who is reminding people of both the old Right John Birch Society and the original kool-aid drinker Jim Jones. Beck will not be the first quasi-populist Rightie with a Messiah complex.

Eliot Spitzer almost has some thoughts about AIG, It’s not the bonuses. It’s that AIG’s counterparties are getting paid back in full.

Everybody is rushing to condemn AIG’s bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG’s counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall.

Spitzer’s major thesis is solid enough, but its ironic both on a political and personal level that he is looking for and thinks there is someone in the world of finance at this point who is as pure as the driven snow. Right now, regardless of who was president, the best one could hope for on thier economic team is the lighter shades of guilt. I’m not an apologist for Geithner, but out of the people mentioned he does belong in the least objectionable category. Geithner had to answer to Paulson and Bernanke, both of whom he had differences with, but Tim has been painted with the same degree of guilt, May 26, 2008 NY Fed’s Geithner: substantial financial reforms needed

“The most fundamental reform that is necessary is for all institutions that play a central role in money and funding markets — including the major globally active banks and investment banks — to operate under a unified framework that provides a stronger form of consolidated supervision, with appropriate requirements for capital and liquidity,” Geithner said.

[  ]…”I do believe, however, that we can make the system better able to handle failure by making the shock absorbers stronger,” Geithner said.

Its well known that Paulson was anti-regulatory, as was his boss a guy named George. How many of us get a veto over what the boss thinks is best. From a CNN transcript,

It’s an interesting question how soon Tim Geithner will leave the New York Fed because he has been one of the prime architects with Paulson and with Bernanke of this bailout effort. And so that seemed to be a cloud over his head at one point but then over time we’ve learned that he actually was the one who wanted to step in and save Lehman Brothers and he was overruled on that; it turned out that he was right.

He early on was blowing the whistle against lax regulation of these derivatives.
That He is more anxious and, I think, much closer to the Obama point of view is to step in and save on housing, he’s more of an interventionist as it’s called.

Geithner was prescient in his view of the financial derivatives – insurance against losses ( too bad America’s working class couldn’t have bought those) Who predicted the credit crunch abyss?

But what about the New York Federal Reserve Bank president, Timothy Geithner, who has also been very active in handling the crisis. On Sept. 15, 2006, Geithner gave a long speech titled “Hedge Funds and Derivatives and Their Implications for the Financial System.” How the World Works noted it at the time, but it bears revisiting, especially by those who would like to believe that no one could possibly have seen this mess coming.

“The changes in credit markets that have accompanied the latest wave of innovation in derivatives and the large role played by leveraged financial institutions in those markets may exacerbate some of the traditional sources of challenges in financial markets…

The effectiveness of market discipline in constraining the risk-taking behavior of financial firms, however, may be compromised by the presence of market failures of the type mentioned above.”

Anyone that works in the real world – private industry, the military – knows that you can only give your boss your opinion and hope for the best. I’m rather low on the blog hierarchy so if I’ve ruffled any feathers in pushing for a more nuanced view of who to blame, to what degree of blame they deserve and what amount of outrage belongs where – lighten up, I have very little influence.

AIG, Bonuses and The Honeymoon Can’t be Over if You Never Had One

The Anymous Liberal has a very readable post on exactly why AIG figures so promiently in the financial straights we now find ourselves and why there is such justifiable outrage that AIG executives recieve bonuses,

That, in a nutshell, is the story of AIG, except of course that AIG was insuring a different type of investment. AIG was in the business of issuing credit default swaps, which are essentially insurance policies that protect lenders from defaults by borrowers. The availability of cheap credit default swaps turned mortgages into a seemingly risk free investment. Mortgages and mortgage-backed securities paid steady, consistent returns and any downside risk could be effectively hedged by buying AIG’s credit default swaps. So demand for mortgage-backed securities shot through the roof.

One writer, who I can’t find at the moment refered to AIG and credit default swaps as a Ponzi scheme that rivaled Bernie Madoff. It seems more like Wall Street became more like some back street gambling hall. But hey everyone has a degree from America’s most prestigious schools, wears nice suits and could numb the average human brain at fifty paces with statistics. It does not look like the Obama administration will be able to block the bonuses ( stories are being filed pretty fast on this story and things could change by the end of the day), Political Heat Sears AIG

President Barack Obama said Monday that he would “pursue every single legal avenue to block” $165 million in bonuses to American International Group Inc. employees who were in part responsible for the insurance giant’s near collapse. But hours later, administration officials said the payouts made Friday couldn’t be extracted from their recipients without a legal fight that would cost the taxpayers even more.

Instead, officials said the White House will focus on ensuring taxpayers recoup the cost of the bonuses and, going forward, executive compensation at AIG would be on a much tighter leash. As leverage, the government said it would apply new rules to the next round of AIG bailout funds, a $30 billion infusion pledged earlier this month.

I was wondering if the government couldn’t recover legal fees along with the bonuses, but AIG would just be paying the fees with bail-out money. This artcile is mostly an account of what Obama plans to do to battle back about the barrage of misocnceptions fuled largely by the medai, about his economic and health-care plans, but mentions that many people – certainly capitol Hill are just suffering from bailout fatigue.

News of the bonuses has threatened to stir a populist backlash against the rescue of AIG and other financial services, which in turn could raise voter concerns that the administration is squandering taxpayer money.

“There is a certain amount of bailout fatigue that’s settled on [Capitol] Hill, and something like this isn’t going to help,” said Jim Manley, a spokesman for Senate Majority Leader Harry Reid (D-Nev.).

“This is another outrageous example of executives — including those whose decisions were responsible for the problems that caused AIG’s collapse — enriching themselves at the expense of taxpayers,” said Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking, Housing and Urban Affairs Committee.

Remember last year when it was found that among several incidents of embezzlement and all those bundles of cash the Bush administration was sending over, $1 billion dollars of medical supplies was sold on the black market. The AIG bonus burhaha is bad,but Obama has a long way to go before he losses as much taxpayer dollars as his predecessor.

The Silliness at The Washington Post

On Sunday, the dean of the Beltway, David Broder announced in the Washington Post that it was over. It being the honeymoon. Over.

Two months into his presidency, it is far too soon to make any judgments about Barack Obama’s prospects. All we really know is that he has assembled the rudiments of an administration and launched a batch of ambitious but unproven initiatives.

Obama has been president for less then two months. Considering that he has in fact been remarkably successful at advancing the agenda which he campaigned on and the issues that meant the most to voters. he had a fight on his hands from day one in trying to reach out to recalcitrant far right Republicans in the House. So what honeymoon did he have exactly. Obama took his oath and the Right and so-called moderates like Broder declared war. All very predictable, but let’s not pretend that Obama got some slack from the fossilized mentality that stills rules the Washington press corps and most Republicans.

Another solid article that us non-economists can read without getting a headache, Real Capitalists Nationalize by Kevin Drum

The amount you can loan out depends on your capital ratio, a number that’s set in the US by the Securities and Exchange Commission. If you’re required to have, say, a 5 percent capital reserve, that means your loan portfolio can be as high as 20 times your capital. That’s $200 billion-and if you fudge things a bit, say through the creative use of off-balance-sheet vehicles, maybe you can loan out as much as $300 billion. If the average return on your loan portfolio is 5 percent, that means you’re making about $15 billion per year with only $10 billion of your own money at stake. Not bad.

But then a crash comes. Homeowners start defaulting on their loans, and you have to write off the losses. That cuts into your capital; plus, with the economy falling, it’s prudent to reduce your leverage. Instead of 30-to-1, maybe you’ll cut back to 20-to-1. The end result is that you’re lending way less money than you used to.

This is, roughly, what’s been happening to the global financial system. Loan losses have reduced capital. Everyone is hoarding money. It’s called deleveraging, and in plain English it means that credit markets are broken.

Beach Sunset wallpaper

The print press is struggling for a few reasons. The two major ones are the internet and 24/7 cable news. We can get the latest news without running out in the rain in our pajamas to get the newspaper the carrier threw under the car. Nope, not according to the Right.The Seattle Post-Intelligencer will roll off the presses for the last time Tuesday because they didn’t get down on their knees and genuflect for the Right, taking dictation from right-wing pundit and politicians. Its sad in a way. I still love reading my Sunday paper, but times change and the Seattle PI will continue as the nation’s largest net only newspaper. A site called Americandigest writes, Buh-Bye to the P. I.: Couldn’t happen to a more liberal paper. Check that. It can and it will. – gloating over a demise that is is only taking place in the writer’s fantasies – typical Conservative – goodness forbid we get anything other then the Right to right-center drivel  from the TeeVee and the David Broders. He also thanks Instapundit for a link. Those two blogs are point of fact part of the new media. The alternative to which crowds of intellectually curious readers are flocking because the PI is not cutting it. Ok, fair enough. Alexia gives Americandigest a trafiic rank of, drum roll please, 200,818. While Reynolds gets a traffic rank of  2,003,422. The Seattle PI, supposedly on life support has a ranking of 1,112 and DailyKos comes in at 9,653. Given a choice the vast majority of American seeking news leave Glenn and Americandigest eating dust. In the top fifty blogs at Technorati – The Huffington Post, Talking Points Memo anDailyKos all beat Reynolds, one of the more popular of the Right’s blogs.

And why go over and read the PI when you get all that fair and balancced bull from Fox, Fox’s Steve Doocy – Liar and Clown

Fox & Friends’ Steve Doocy falsely asserted that President Obama has proposed eliminating the ability of high-income taxpayers to take income tax deductions for their home mortgages. In fact, Obama has not proposed eliminating income tax deductions for any taxpayers; rather, a provision in Obama’s budget proposal would, beginning in fiscal year 2011, reduce the tax rate at which families earning more than $250,000 per year can take itemized deductions to 28 percent.

Geithner Pushes for Tighter Bank Regulation, Cheney Shrugs Off Responsibility

This would seem to signal the administration is listening to criticism of it being too timid in how it deals with those institutions receiving any bail-out funds. Whether that criticism was warranted or not, we’re an appearances obsessed culture that tends to want things done yesterday, U.S. to Toughen Finance Rules

The principles include giving the Federal Reserve new powers that include authority to monitor and address broad risks across the economy, say people familiar with the matter. The proposals are expected to include tougher capital requirements for big banks and authority for regulators to take over a large financial firm that is failing.
Proposed Changes

Treasury Secretary Timothy Geithner will soon outline proposed changes in financial regulation. They are expected to include:

* An enhanced role for the Federal Reserve to monitor and address broad economic risks.
* Changes to the way banks are overseen to prevent lenders from shopping among regulators for the easiest supervision.
* More transparency and stricter rules for the way money flows between banks.
* Tougher capital requirements for big banks.
* Consolidation of consumer-protection enforcement.

Its also good to see Geithner being front man on some of these moves. From my experience the Treasury Secretary seems like one of those really bright guys that is not prone to making false or inflated promises. Looking back at the history of Lawrence Summers (head of the White House’s National Economic Council), who would the average American go to for economic advice – espeically in the realm of Wall Str regulation, Geithner or Summers.

Stuff Happens

Cheney’s “Stuff Happens” Defense of Republican Failure – a must read on the history of the Bush/Cheney concept of responsibility and their history of abject failure to protect America in the months leading up to 9-11. One of the many links that Perrspectives supplies is this reminder of how Mr. Stuff Happens views the world, Bush Administration’s First Memo  on al-Qaeda Declassified

In a series of recent public statements, Secretary of State Condoleezza Rice has again denied that the Clinton administration presented the incoming administration of President George W. Bush with a “comprehensive strategy” against al-Qaeda. Rice’s denials were prompted by a September 22 Fox News interview with Bill Clinton in which the former president asserted that he had “left a comprehensive anti-terror strategy” with the incoming Bush administration in January 2001. In a September 25 interview, Rice told the New York Post, “We were not left a comprehensive strategy to fight al-Qaida,” adding that, “Nobody organized this country or the international community to fight the terrorist threat that was upon us until 9/11.”

The crux of the issue is a January 25, 2001, memo on al-Qaeda from counterterrorism coordinator Richard Clarke to National Security Adviser Condoleezza Rice, the first terrorism strategy paper of the Bush administration. The document was central to the debate over pre-9/11 Bush administration policy on terrorism and figured prominently in the 9/11 hearings held in 2004. A declassified copy of the Clarke memo was first posted on the Web by the National Security Archive in February 2005.

Clarke’s memo, described below, “urgently” requested a high-level National Security Council review on al-Qaeda and included two attachments: a declassified December 2000 “Strategy for Eliminating the Threat from the Jihadist Networks of al-Qida: Status and Prospects” and the September 1998 “Pol-Mil Plan for al-Qida,” the so-called Delenda Plan, which remains classified.

One of the things that struck me about Cheney’s recent assertions is that casual attitude, when for seven plus years, Cheney and far Right surrogates tried to blame Bill Clinton for everything from 9-11 to thier horrible economic record. That in mind it is not remarkable at all that the unhinged Right is trying to blame President Obama for their failures. Stuff does indeed happen. People are frequently victims to events out of their control. But there is a Goldilocks rule when it comes to responsibility – one tries to handle as much as they can, and be as proactive as possible – law breaking would not count as proactive. BushCo and the Right never understood that, they continue to be all extremes.

Blue City Skyline wallpaper

Blue City Skyline wallpaper

MahaBlog is recommending an article from the current print edition of Harpers called Infinite Debt by Thomas Geoghegan ,

What is history, really, but a turf war between manufacturing, labor and the banks? In the United States, we shrank manufacturing. We got rid of labor. Now it’s just the banks.

Which is why the middle class is shrinking. Basically, we’re all waiters now; we’re bowing and scraping and working for the banks.

There is more at the link, but I was hoping to find a larger snip at the on-line edition. I came up empty, but did find this article, Americans Unwilling to Face Reality – which echoes some related sentiments.

It’s not as though no one saw it coming. Here’s the economist Michael Hudson, writing in the May 2006 issue of Harper’s Magazine: “The reality is that, although home ownership may be a wise choice for many people, this particular real-estate bubble has been carefully engineered to lure home buyers into circumstances detrimental to their own best interests…. The bubble will burst, and when it does, the people who thought they would be living the easy life of a landlord will soon find that what they really signed up for was the hard servitude of debt serfdom.”

Other commentators, including Warren Buffet, said similar things about the derivatives market. He was prescient, but hardly anybody listened. Americans, perhaps even more than other people, have difficulty embracing the concept of “reality.”

The part of derivatives trading in the financial sector and its part in the housing/financial crisis should have become the moon orbits the earth matter of fact by now. No. Just this weekend, a nice guy that sounded like he could be one of relatives called in to C-Span to declare that poor people are to blame for buying houses they could not afford. Certainly over the last quarter century many Americans that would have been better off renting, bought that white picket fence fantasy, they were hardly to blame for trashing the economy. Its like a puzzle where the Right is forcing some pieces into place that are not remotely related to reality. Everyone from O’Reilly to Malkin to Limbaugh are saying the total aggregate buying power of the lowest income Americans has been the pillars on which the entire economy rest.

CNN’s John King did not challenge Cheney’s false claim that “chairmen” Frank, Dodd were “stone wall” to Fannie/Freddie reform

On CNN’s State of the Union, host John King did not challenge former Vice President Dick Cheney’s false claim that the Bush administration tried “to impose reforms on Fannie Mae and Freddie Mac, and we ran into a stone wall on Capitol Hill in the form of the chairmen and — of the Banking Committee in the House and the Senate, Barney Frank and Chris Dodd.” In fact, Frank and Dodd were not “chairmen” until 2007, after which time Congress passed oversight legislation of Fannie and Freddie.

Poor people destroyed the economy is only part of the myth the Right continues to regurgitate. They had help from Frank and Dodd. In other ironic news, the Right’s ‘tea parties’ in conjunction with the bonus fiasco at AIG  may provide the political prod needed for the Obama administration to partly national AIG and a few banks. Doing so will leave the Right with one less major talking point in their late to the party concern about fiscal responsibility. Plus Obama could claim that he started the nationalization partly out of concerns from Conservatives.

The One and Only Original Generational Thieves

The Original Generational Thieves – the Republican legacy.

Thanks to WaPO for getting its editorializing up front in this headline, Obama’s New Tack: Blaming Bush

Over the past month, Obama has reminded the public at every turn that he is facing problems “inherited” from the Bush administration, using increasingly bracing language to describe the challenges his administration is up against. The “deepening economic crisis” that the president described six days after taking office became “a big mess” in remarks this month to graduating police cadets in Columbus, Ohio.

“By any measure,” he said during a March 4 event calling for government-contracting reform, “my administration has inherited a fiscal disaster.”

Its not a matter of blaming Bush, but of pointing out where the responsibility for the nation’s economic troubles originated. One an hardly blame Obama for reiterating the obvious. Limbaugh, Hannity, Malkin, O’Reilly, The National Review and the American Enterprise Institute have suddenly emerged from their bunkers and realized that gee wiz the national debt is awfully darn high – how did that happen, who’s going to pay for the last eight ears of borrow and spend Conservatism. Republicans, who for six of the last eight years were responsible for 60% plus of the earmarks in the federal budget have suddenly declared earmarks an eight letter word. Obama’s continued high approval ratings show that the public is being remarkably patient. This may explain the shrill heights of Conservative hypocrisy when they have the gall to complain about the debt left for their children. They didn’t care about that debt when they were writing the checks on the backs of working class Americans.

While not a big Lawrence Summers fan he does a good job of fielding some Q&A over at McClatchy

“On a global basis, $50 trillion in wealth has been erased over the last 18 months. This includes $7 trillion in the U.S. stock market and $6 trillion in housing wealth,” Summers said, adding that greed has given way to fear.

“This is the paradox at the heart of the financial crisis,” he continued, noting that it “was this transition from an excess of greed to an excess of fear that President (Franklin) Roosevelt had in mind when he famously observed that the only thing we had to fear was fear itself. It is this transition that has happened in the United States today.”

Summers also said that after plummeting during the holiday season, consumer spending appears to have stabilized, which he said was “modestly encouraging.”

That wealth was disappearing from the economy for over two years before Obama took office, yet haven’t seen a single winger with a sign that says they apologize for voting for the people that made the monetary and regulatory decisions that lead to that loss of wealth. One should not be surprised or disappointed to find that Republicans have and will continue to lie and shirk their responsibility. They lied for fifty years to get power, lied to keep it and if they stop lying about their record they will remain a marginal, if irritating force in American politics. Blame shifting is their only viable option. Besides the irony of the crony socialists calling the president who is trying to save American free market capitalism, a socialist. Summers also defends Treasury Secretary Timothy Geithner,

A: I think that Secretary Geithner has handled this in a difficult and courageous way. The easy thing to do would be . . . to lay out a nine-point plan with illusion of specificity and the sense of certainty about what the future would bring. It’s so easy that we saw half a dozen of them from the previous administration; it’s just that they were different each month. The right approach, the approach that Secretary Geithner has taken, is an approach that lays out a framework, that, unlike so much of the commentary, actually recognizes the enormous complexities of the problem and the balances that need to be stuck.

I can understand the Wall Street Journal – who share some responsibility in being dishonest to the point of negligence in their financial news coverage during the Bush years, but I do not understand why some liberals of all people would deride Geithner’s honesty. Bush promised economic growth, job growth, declared victory when their was none, said the air was getting cleaner as it got dirtier, said he would punish those that had anything to do with outing a CIA agent. In other words if Bush was making a promise, he was lying. Now Geithner comes along and refuses to be backed into a corner where he makes Bush-like crystal ball predictions and refuses to do that. He cannot know the exact twist or turn the economy might make, he can only do what he is doing, planning for multiple contingencies. Where is the Republican plan. They have all the answers – well you can read what answers they have on a tea party protest sign. Where are the numbers, the steps, the grand plan of the grand old party – not to be found. Ankle biting is not a plan, Republicans Split on Need to Offer Rival for Budget

Congressional Republicans are engaged in a highly coordinated political assault on President Obama’s budget, but they are not so united when it comes to offering an alternative to the spending plan they have been shredding as irresponsible.

Breaking with the House, Senate Republicans say they do not intend to offer a full counterproposal to Mr. Obama’s sweeping $3.6 trillion spending blueprint, a decision that will spare them from outlining potentially painful decisions required to bring federal books more in line with their call to hold down spending, cut taxes and reduce the deficit.

Courage is not a hallmark of the new remodeled Republican party.

Mountain Snow Spring Valley wallpaper, Scottish Mountain Storm wallpaper

Mountain Snow Valley Spring wallpaper

Scottish Mountain Storm wallpaper

Today anway the economy is not all dome and gloom, Bank of America shares jump on CEO’s comments

Bank of America Corp. shares rose Thursday for a fourth consecutive day after Chief Executive Ken Lewis said he expected the company to earn “close to $50 billion” this year, before taxes and new provisions for loan losses.

“That kind of cash flow can solve a lot of problems, given time and an improving U.S. economy,” Lewis said in a speech in Boston.

Of course, future loan losses are the wild card. But some investors gave the company the benefit of the doubt: The stock jumped 92 cents, or 19%, to $5.85, outperforming the rest of the banking sector, even on a day that financial issues led the overall stock market up sharply.

People are spending money. Good for them since prices on consumer products seem to be on an extended after Christmas sale. That in turn isn’t so great in terms of profit margins, S&P 500, Dow rise on Citi optimism

S&P 500 stock index futures briefly turned positive as a government report on February U.S. retail sales pointed to some stabilization in consumer spending, overshadowing news of an increase in the number of people filing for unemployment benefits in the latest week.

This domestic blip of good news echoes through Asia, World stocks charge higher on better banking hope

Apparently the Wall Street Journal likes the Rasmussen presidential index. We’re at the second week in a row they have reported an outlier in which president Obama gets a 53% approval. Odd that Pollster gives Obama a 60% approval and gallup as of today gives him a 63% approval. With unemployment at over eight percent, some of the nation’s largest banks in shambles its understandable that people are nervous – certainly the misinformation campaign being waged by the Right isn’t helping the average American understand what is going on. Most Americans still realize two things Bush and Republicans were the major guardians of the nations economy for six years – the benefits of which have upended the lives of millions of decent hard working Americans. The second, that shouting a president that has been in office should be able to clean up the complicated mess in one weekend is simply the Republican party reinforcing its image as extreme wackos. They’re having tea parties. Enough said.

George W. Bush January 2001-January 2005 62.2%. That includes the fact he didn’t enter office with the country in the ditch and his amazingly high ratings just after 9-11. Ratings which he and Republicans exploited for an agenda so radical we were starting to look more like a banana republic then the country of Jefferson and Madison.

Stewart tells Cramer what CNBC should have been doing all along

In tonight’s interview, Stewart makes the case for what CNBC should have been doing over the past few years: actual business reporting, instead of acting like they were an entertainment channel for the stock market.

Jim Cramer seems like a nice guy. But the nice part got beat to hell by an out of control ego.

Astro-turf Organizations Accuracy in Media and Judicial Watch Go Zero for Two

Arrogant outrage

Conservatives, those people that own most of the media and generally lean toward laziness and center-right spin, have several media watchdog organizations. They specialize in getting red faced any time the media either gives Democrats some marginally fair coverage or do not feel deep in thei hearts the media is pushing their latest salvo of propaganda. Accuracy in Media is one of those organizations. Just as those spontaneous “tea party” protests were and continue to be facilitated by astro-turf right-wing mutli-millionaires ( this sin’t to say that there are some regular folks that believe in the message – only the message is manufactured by those very wealthy right-wing backers), Accuracy in media is also financed by wealthy right-wingers ( Some corporate backers include Exxon, IBM and Coors beer). So what’s AIM’s beef? They swear those grassroots astro-turf ‘tea parties’ are being ignored by the media, A Dereliction Of Journalistic Duty

If a revolution happens and no reporters cover it, will it make a sound? That’s a good question because an anti-tax revolution as American as they come is under way, and the country’s top newsmen could care less.

[  ]…But if you only get your news from the mainstream media, you probably wouldn’t know the protests ever happened. Most major news outlets have provided zero coverage of any of the individual events or the grassroots movement as a whole.

Its almost enough to make one a little misty eyed at the utter unfairness of it all. Except, as is usually the case, the Right’s idea of injustice is little more then the tired old Chicken-Little act. In the last nine hours over 600 report have been filed from media outlets that included some of the nation’s most prominent news outlets including, but not limited to CNN, the Kansas City Star, Arizona Republic, Christian Science Monitor, Miami Herald, The Washington Post, The Street, TIME, Wired News, Forbes magazine, Bizjournals, CBS News and USA Today. A news search that goes back a mere 23 hours shows that the same prominent print and cable outlets filing over 2000 reports on the Tea Revulters.

Yes they went after Dick Cheney and secret  meetings with energy companies like Enron, but Judicial Watch is primarily yet another right-wing media watch dog group. Their work, their world view and their journalistic standards are about the same as Accuracy in Media, exceedingly low, Pelosi Travel Abuse? Case Not Proved – Watchdog Group Criticizes House Speaker for Travel Perks, but Records Don’t Agree

The treasure trove of documents obtained by Judicial Watch from the Department of Defense regarding Speaker of the House Nancy Pelosi’s use of military aircraft doesn’t seem to prove the organization’s allegation that Pelosi has made “unprecedented demands” for the flights.

In fact, it appears that Pelosi uses military aircraft less often than her predecessor, former Speaker of the House Dennis Hastert.

Hastert was and still is I suppose, what else, a Republican. That said, what seems to be Speaker Pelosi’s problem. She could avoid this scrutiny and gossip by meeting with the House Ethics Committee and the Pentagon and decide once and for all what kind of plane to use and what constitutes a fair allotment of miles before she’s takes up the slack out of her own pocket. Why hand the Right an opening like this.

City at Night Skyline wallpaper V

Remember one of the tea party mottos is that your lost job and foreclosure ain’t their problem – a modern take on Dicken’s Scrooge who said of the poor ” If they’d rather die, they had better do it and decrease the surplus population. Good night, gentlemen.” Besides the cruel social-darwinism implicit in their beliefs, the fact is that most people in foreclosure are not in that position because of irresponsible behavior. Many have tried to save themselves and the roof over their head, only to be victimized, Homeowner Rip-Offs Spark Scores of Lawsuits

After aggressive mailings and phone calls, HSBC would “trick” the homeowners into providing their Social Security numbers, which allowed HSBC to gain access to their complete credit histories, and use the information to talk people into high-interest consolidation loans, the suit says.

The loan amounts were so high – and with interest up to 20 percent – that they often far exceeded the value of the homes, and made it impossible for the family to ever refinance with a competitor, according to the lawsuit.

HSBC settled that lawsuit, denying any wrongdoing. It has since been sued by ACORN, the grassroots organisation, and others.

HSBC has plenty of company.

“There are dozens and dozens of cases against Countrywide,” class-action attorney Jeffrey Norton told IPS. He is suing Countrywide on behalf of thousands of plaintiffs who are being charged unfounded fees during loan modifications and foreclosure.

“When someone gets a loan modification agreement, there is one line that says ‘fees.’ It can be anywhere from hundreds to thousands of dollars. No one can get answers as to what the fees are comprised of,” Norton said.

After receiving many complaints, the National Association for the Advancement of Coloured People (NAACP) filed suit against HSBC, Countrywide and 17 other big-name lenders in 2007, for charging higher mortgage interest rates to people of colour.

The suit, still underway, may help correct the “egregious, demoralising practices that too often turn the so-called American dream of homeownership into a nightmare,” said NAACP chairman Julian Bond.

Named in the suit are: Ameriquest, Accredited Home Lenders, Bear Sterns, BNC Mortgage, CitiMortgage, Encore Credit, Fremont Investment & Loan, First Horizon, First Franklin Financial, GMAC, JP Morgan, Long Beach Mortgage Company, National City, Option One, Suntrust Mortgage, Washington Mutual, Inc. and WMC Mortgage Corporation.