Tuesday, March 03, 2009

Are Geithner Past Ties To Powerful Banks A Problem When It Comes To Fixing Them

Just asking.

More and more with each passing day you hear criticism mostly by the MSM of Treasury Secretary Tim Geithner handling of the banking crisis. Many economist and experts are calling for a more systematic approach in dealing with failing banks. Everyone for this type of approach says that the rules should be laid out so they could be understood by all on just how the government will proceed when it comes to dealing with the bad banks. Not approaching the problem in this way will only create more uncertainly and could prolong the crisis or make things worse.

Up to this time the federal government's approach under former Treasury Secretary Paulson and now Giethner has been to deal with the overwhelming crisis in what could be called a piece meal way. A company like AIG gets in trouble and the federal government rushes in and give them billions. The rules seem to change day to day. AIG has now been given 3 massive bailouts. Once again financial experts think the government should move swiftly towards a systematic, well understood by all, approach to identify troubled banks and nationalization them if necessary instead of going from crisis to crisis.

Yet Geithner seems not to be listening. Could it be that he is too tied to these same bankers he now must stand up to in dealing with such questions as whether to take them over or not? Remember that Geithner actually came from the New York Federal Reserve Bank and much of what has happened has happened on his watch while he was there. It was his job to oversee the very banks that are now the problem. Many of the bankers that got us into the problem worked closely with Geithner when he was in New York. Another question is why the government is so willing to give billions to the same unscrupulous bankers who were the ones who screw things up in the first place. Why haven't they been fired and replaced with new people. This appears to makes no sense.

Simon Johnson a MIT professor and a former research director of the IMF analyzes the bank bailout plans and other alternatives in an extensive interview on NPR. The interview touches on just about every aspect of the crisis, including Geithner's conflicts, and Johnson does a remarkable job making this complex issue understandable for the average person I think. I only hope the president is also getting this type of information and I'm the just being paranoid.

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