Geithner: Wrong on Everything

“At every turn on housing — on mass refinancing, on principal reduction, on leverage for homeowners in the bankruptcy process, on forcing banks to write down mortgages, on a modern-day HOLC–the evidence points to Tim Geithner preferring whatever option put the least pressure on banks, rather than actually helping ordinary people. He made far more excuses to do nothing than any effort to make a difference…In fact, the programs were never meant to help homeowners, designed only to ‘foam the runway’ for the banks, to spread out foreclosures and allow banks to absorb them.”

In the wake of Tim Geithner’s new rehab book tour — currently being aided and abetted by Wall Street’s usual court stenographer, Andrew Ross Sorkin — Dave Dayen says not so fast. “I don’t have to just focus on housing; this is indicative of Geithner’s worldview, which sees protecting the financial system at all costs as the only thing that matters.”

Yves Smith has also ably eviscerated Geithner’s game of “Three Card Monte”: “The entire edifice of the piece is a sleight of hand…The focus on TARP (and to a lesser degree, Lehman) allows Sorkin to omit mention of actions that were clearly Geithner’s doing…The bigger point, which is not lost on the public, was there were plenty of other options for saving the system. The one chosen, that left the banks largely unreformed and no one of any consequence punished, was clearly just about the worst of the available options, unless, of course, you are, like Geithner, a banker.”

And here’re economics and finance professors Atif Mian and Amir Sufi: “Whatever reasons he had for opposing assistance to underwater homeowners, a careful evaluation of the policy effects was not among them. The evidence is pretty clear: an aggressive bold attack on household debt would have significantly reduced the horrible impact of the Great Recession on Americans. The fact that Secretary Geithner and the Obama administration did not push for debt write-downs more aggressively remains the biggest policy mistake of the Great Recession.”

Noam Scheiber has his say in TNR: “[The article] inadvertently highlights something deeper about Geithner, which is the shocking extent to which he’s accepted financialization of the economy as a benign, even admirable, development. The people who spend their days shuffling trillions of dollars around the globe are really just like you and me, except with nicer offices. They deserve the same sympathy and respect, notwithstanding their abysmal track record. That blinkered view colors pretty much every one of Geithner’s utterances as he makes the rounds hawking books.”

Also of note: Geithner doesn’t seem to understand how Social Security works, and, in classic #ThisTown fashion, he — the Secretary of the Treasury! — just parrots the same ignorant Beltway line about zomg out-of-control entitlements as all Very Serious People™ do. To wit, from Geithner’s book:

“I remember during one Roosevelt Room prep session before I appeared on the Sunday shows, I objected when Dan Pfeiffer [a senior advisor to the Obama White House] wanted me to say Social Security didn’t contribute to the deficit. It wasn’t a main driver of our future deficits, but it did contribute. Pfeiffer said the line was a ‘dog whistle’ to the left…code to the Democratic base, signaling that we intended to protect Social Security.”

And here’s the LA Times’ Michael Hiltzik: “But let’s get to the nub. Does Social Security ‘contribute to the deficit’? The answer is, bluntly, no. By law, it can’t contribute to the federal deficit, because Social Security isn’t allowed to spend more than it takes in. Those who claim — as Geithner has at one point or another — both that the program contributes to the deficit yet will be forced to reduce benefits to retirees once its trust fund is depleted are trying to have things both ways: The reasoning behind the threat of reduced benefits is that Social Security can’t engage in spending money it doesn’t have, i.e., deficit spending. Pick one, fellas. If it can contribute to the deficit, then there’s no reason to cut benefits.”

So is there’s anything positive about Geithner’s rewriting of history here? Well, the Sorkin piece does include this telling anecdote: “At another point, [Geithner] cheerfully relayed a story that also appears in his book about the time he sought advice from Bill Clinton on how to pursue a more populist strategy: ‘You could take Lloyd Blankfein into a dark alley,’ Clinton said, ‘and slit his throat, and it would satisfy them for about two days. Then the blood lust would rise again.'”

Could somebody please tell me again why I should be excited about Hillary 2016?

Update: Sheila Bair offers her take. “On his book tour, to explain the need for bailouts, Tim has used a clever analogy of a pilot trying to land a plane that is on fire and in the back, sit the terrorists who started it. He argues that the pilot can’t leave the cockpit to put them in handcuffs. He first has to land the plane. The problem with this analogy is that the plane landed at the end of 2008. And let’s face it, instead of handcuffing the terrorists, we escorted them to the executive lounge.”

Game of Votes.

Still taking a break. Nonetheless, this was too on-the-nose not to share, for election 2012 is dark and full of terrors. Enjoy.

Crime of the Century.

A tale of two financial crimes: After the Savings and Loan Crisis of the late 80’s and early 90’s — a clear consequence of Reagan-era deregulation, by the way — had run its course, 1852 S&L officials were prosecuted, and 1072 of them ended up behind bars, as did over 2500 bankers for S&L-related crimes. But, when a similarly-deregulated Wall Street plunged the US economy into a much steeper recession two decades later…nobody (with the notable exception of Bernie Madoff) went to jail — In fact, it was barely even admitted by the powers-that-be that serious crimes had even occurred at all. So what happened?

That is the stark question driving Charles Ferguson’s well-laid-out prosecutorial brief Inside Job, which works to explain exactly how we ended up in the most calamitous economic straits since the 1930s. If you’ve been keeping up on current events at all, even if by comic books, stick figures, or Oliver Stone flicks, then you won’t be surprised by the frustrating tale Inside Job has to tell. But unlke the more inchoate and disorganized Casino Jack and the United States of Money earlier this year, which ultimately let its subject wriggle off the hook, Inside Job tells its sad, sordid story clearly, concisely, and well.

The central through-line of the financial crisis by now is well-known. Basically, Wall Steet banksters — relying heavily on “market innovations” (i.e. unregulated toys) like securitization, collaterized debt obligations (CDOs) and credit default swaps — spent the first decade of the 21st century engaged in a trillion-dollar orgy of avarice, criminality, and fraud. And, a few prominent casualties like Lehman Brothers and Bear Stearns aside, the perpetrators of these financial misdeeds mostly walked away unscathed from the economic devastation they wrought. In fact, they’re doing better than ever.

Said banksters got away with this from start to finish mainly becauset they could, thanks to thirty years of deregulation and an absolute bipartisan chokehold on the political process. So, when the bill came due in 2008, these masters of the free market just got the Fed to socialize their losses, thus handing the damage over to the American taxpayer by way of Secretary of the Treasury Hank Paulson (former Chairman and CEO of Goldman Sachs) and his successor, Tim Geithner (no stranger to Wall Street himself.)

As I said recently, my thoughts on the relative necessity of TARP have shifted a good deal since 2008, but, surprisingly, Ferguson doesn’t really get into that debate here. Inside Job is more broad in its focus: It aims instead to show how Wall Street has systematically corrupted both our political process and our economics departments over the course of decades, and nobody is safe from its wrath. Sure, it was probably a tremendously bad idea to let an Ayn Rand acolyte like Alan Greenspan call the shots for the American economy for so long, but he’s just the tip of the iceberg. There are other fish to fry.

After all, it is President Clinton and his financial lieutenants, Robert Rubin and Larry Summers, who preside over the death of Glass-Steagall, the original sin that precipitates all the later shenanigans. It is also they who work to keep prescient regulators like Brooksley Born from sounding the alarm. And, after the house of cards has collapsed in 2008, and President Obama steps up to the plate promising “change we can believe in,” who does he pull out of the bullpen to lead us but…the irrepressibly porcine Larry Summers and Tim Geithner, the Chair of the New York Fed? Meet the new boss, same as the old boss. (But remember, folks, Obama is really an anti-business socialist.)

What goes for the US government goes for the academy as well. As Ferguson shows, Milton Friedman aficionadoes and Reagan/Bush policy guys like Marty Feldstein of Harvard and Glenn Hubbard of Columbia, who now find themselves atop prestigious Ivy League economics departments, are all too happy to give an academic imprimatur to bad bankster behavior, as long as they see a piece of the cut. (Nobody gets it worse than Columbia prof and former Fed governor Frederic Mishkin, who appears here to have walked into a battle of wits completely unarmed.)

In the meantime, Ferguson fleshes out the documentary with related vignettes on the financial crisis and those who brought us low — some work, some don’t. The movie begins with the cautionary tale of Iceland, about as pure a real-time case study into the abysmal failures of deregulation as you can ask for. (If that doesn’t do ya, try Ireland.) But the film ends as badly as it starts well, with an overheated monologue about the way forward, cut to swelling music and images of the Statue of Liberty — a cliche that serves to dissipate much of the pent-up anger of the last 90 minutes. (Perhaps Inside Job should’ve used the lightning strike.)

What’s more, at times Ferguson seems to try too hard to frame guilty men, and never more so than when he has a former psychiatrist-to-the-bankster-stars opine about cocaine abuse and prostitution all over the Street. Sure, it’s unsavory, and I see the ultimate point here — that these petty crimes could’ve been used to flip the lower-level traders if anyone had had tried to bring a RICO case against these jokers. But this sort of bad behavior, however frat-tastically douchey, is extraneous to the real crime at hand, and it seems really out of place when you’re using fallen crusader Elliot Spitzer as a witness for the prosecution.)

Still, overall, Inside Job is a very solid documentary that manages to capture its elusive quarry, and in a better world it would result in more serious consequences for the banksters who put us in this mess. Make no mistake — this is a crime story. As Massachusetts rep Michael Capuano observes in the trailer, and as Woody Guthrie put it many moons ago, “some rob you with a six-gun, and some with a fountain pen.” Thing is, when Pretty Boy Floyd or John Dillinger robbed banks back in the day, they got shot. When the banks rob you…well, that’s apparently another thing entirely.

Birds of a Feather.

“Could I offer one piece of serious advice?…Start thinking now about you want your legacy to be.” Having made peace with The Queen, Tony Blair (Michael Sheen once more) now contends with President Bill and First Lady Hillary Clinton (Dennis Quaid and Hope Davis respectively) in this brief teaser for Richard Loncraine’s The Special Relationship, written by Peter Morgan. (This is the fifth Morgan/Sheen collaboration after The Deal, The Queen, Frost/Nixon, and The Damned United.) With this, Treme, The Pacific, Song of Ice and Fire, and Boardwalk Empire, the reasons for re-subscribing to HBO seem to be mounting.

The Last Dog Diatribes.

“During the discussion, Clinton told his vice president that he was disappointed that Gore had not used him in the last ten days of the 2000 campaign in strategically significant states — Arkansas, Tennessee, New Hampshire, and Missouri…Clinton insisted to Gore that he hadn’t cared about how Gore had referred to Clinton — and his personal scandal — during the campaign. Paraphasing this portion of the conversation, Branch writes that Clinton told Gore, ‘To gain votes, he would let Gore cut off his ear and mail it to reporter Michael Isikoff of Newsweek, the Monica Lewinsky expert.’”

In Mother Jones, David Corn previews some of the interesting tales disclosed in historian Taylor Branch’s forthcoming The Clinton Tapes: Wrestling History with the President. “In 1997, after New York Times columnist Maureen Dowd wrote an acerbic column about Clinton and golfer Tiger Woods — maintaining that the the two green-eyed hucksters deserved each other — Clinton told Branch, ‘She must live in mortal fear that there’s somebody in the world living a healthy and productive life.’“

The Serpent on the Staff.

“As a society, we trust doctors to be more concerned with the pulse of their patients than the pulse of commerce. Yet the American Medical Association is using that trust to try to block a robust public insurance option as part of health reform. In fact the A.M.A. now represents only 19 percent of practicing physicians…Its membership has declined in part because of its embarrassing historical record: the A.M.A. supported segregation, opposed President Harry Truman’s plans for national health insurance, backed tobacco, denounced Medicare and opposed President Bill Clinton’s health reform plan.“

And don’t forget Sheppard-Towner: In his column this week, Nicholas Kristof take aim at the powerful American Medical Association. “‘They’ve always been on the wrong side of things,’ Dr. Scheiner told me, speaking of the A.M.A. ‘They may be protecting their interests, but they’re not protecting the interests of the American public.‘”

Fine, We’ll Do It Without You.

“‘There will be people in districts all over the country that will wonder why, when there’s a good bill to get the economy moving again, we still seem to be playing political gotcha,’ White House press secretary Robert Gibbs said in an interview.” Well, so much for the post-partisan era. Despite several attempts at across-the-aisle diplomacy by the new administration, the House passes President Obama’s stimulus bill 244-188 without a single Republican vote. Sigh.

Perhaps a little history lesson is in order. Journey with me, if you will, back to 1993, the last time a new Democratic president tried to work with this same crew of jokers on a new, recession-busting economic plan. As you may remember, Clinton’s 1993 budget also passed the House and Senate without a single GOP vote. Let’s see what the Republicans had to say back then (courtesy of some old, off-line research of mine):

Dick Armey (who, btw, made an embarrassment of himself on national television last night): “This bill would grow the Government…shrink the economy” and “will mean fewer jobs for ordinary Americans.” [Congressional Record, 8/5/93]

Newt Gingrich: The bill will “kill jobs and lead to a recession” that would “force people off of work and onto unemployment and will actually increase the deficit.” [Houston Chronicle, 8/7/93, 1993; AJC, 8/6/93]

Bob Dole: The bill “would take America in the wrong direction.” [WP, 8/4/93]

Ronald Reagan (yes, they wheeled him out with talking points): The bill will “only cause the deficit to increase and will likely wreck any hopes for economic recovery.” [“Just Say No to Clinton’s Package,” NYT op-ed, 8/3/93]

Rush Limbaugh: True to form, the GOP’s poster boy bet the DNC $1 million on the air that three of the following five things would happen by 1996: 1. The deficit would grow. 2. Unemployment would rise. 3. Inflation would swell. 4. Interest rates would surge. 5. The President’s approval rating would fall below 45 percent. [ James McTague, “Off to the Races,” Barron’s, 3/18/96]

Well, I’m sure I don’t need to remind you of the untold economic devastation that was the remainder of the Clinton years. (If you’re keeping score, Rush went 0-for-5, and never paid up.) As it turns out, just as with Boehner this time around, the GOP had decided beforehand they weren’t going to vote for any Clinton bill. As Bob Woodward notes in The Agenda (p. 109), Dole told Clinton this three weeks before the bill was even proposed.

Then as now, the modern Republican party doesn’t seem to understand the first thing about basic economics (their right-wing dogma precludes any grasp of Keynesianism, I guess.) They don’t seem to “get” rudimentary American history. (I’ve seen so many dumb things written about Herbert Hoover and the 1937 “Roosevelt recession” — which was caused by spending cuts and fiscal retrenchment by the FDR admininstration, not “over-regulation” — by right-wingers of late that it’s hard to even know where to begin.)They don’t seem to understand basic politics. (The American people have obviously voted for action, and a path away from Dubyanomics. Getting in the way of this bill won’t “reboot” their party in any way, shape, or form.) At this point, it’s an open question whether they can distinguish their asses from their elbows.

So…can we please stop spoon-feeding these guys now? The GOP has proven yet again that they’re not looking to play ball. If they want to be on the wrong side of the problem as usual, let them. It’s useless to spend any more time bending over backwards to accommodate their lousy, discredited ideas and inchoate, faith-based economic beliefs. It’s time to move on.

Second Verse, Same as the First.

“Well, you know, Sen. McCain, in the last debate and today, again, suggested that I don’t understand. It’s true. There are some things I don’t understand. I don’t understand how we ended up invading a country that had nothing to do with 9/11, while Osama Bin Laden and Al Qaeda are setting up base camps and safe havens to train terrorists to attack us. That was Sen. McCain’s judgment and it was the wrong judgment.“

As you know, the second of three presidential debates is now in the books. [Transcript.] And, while it’s still way too early to put this election in the fridge — there’s a lot of crucial get-out-the-vote work to be done first, and we all saw how that turned out last time ’round — we nevertheless seem to be moving away from the closely divided America of 2000 and 2004 and fast approaching an contest similar to Bill Clinton’s relatively smooth re-election of 1996. That year, the nation ignored the continued haranguing of an aging war hero about cultural matters to back the candidate with a clearly better grasp on both the economy and the way Americans really live. By all reliable accounts, Sen. Obama, who won the evening handily last night, is the Clinton candidate this time around, and it seems to be helping him across the board.

Sen. Obama not only seemed to have a clearer grasp on the causes, consequences of, and potential remedies for our current economic travails last night, he came across as more competent, more discerning, more likable, and more presidential throughout. Meanwhile, for all McCain-Palin’s wallowing in the tired old culture war over the past few days, the Senator from Arizona seemingly left all of his new favorite talking points in his other suit. And, while desperately needing some kind, any kind, of game-changer last night, McCain instead just puttered around the town hall muttering the same stale GOP platitudes — he’ll raise your taxes! he’s won’t keep you safe! — that didn’t get the job done the first time ’round. In short, let’s not count our chickens just yet — we’ve got one more of these next week, and three weeks thereafter to keep the pressure on. But, right now, it’s looking pretty good, folks.

Clinton II: I Want to Believe.

“Everything I learned in my eight years as president and in the work I’ve done since, in America and across the globe, has convinced me that Barack Obama is the man for this job. He has a remarkable ability to inspire people, to raise our hopes and rally us to high purpose. He has the intelligence and curiosity every successful president needs. His policies on the economy, taxes, health care and energy are far superior to the Republican alternatives. He has shown a clear grasp of our foreign policy and national security challenges, and a firm commitment to repair our badly strained military. His family heritage and life experiences have given him a unique capacity to lead our increasingly diverse nation and to restore our leadership in an ever more interdependent world. The long, hard primary tested and strengthened him. And in his first presidential decision, the selection of a running mate, he hit it out of the park.:

And with that, President Bill Clinton, in his impressive throwback performance tonight, helped to rectify the most egregious lacunae in his wife’s speech the night before. [Transcript.] In some ways, the former President’s speech exhibited a classic Clinton dynamic: His remarks had many of the same issues as those of Sen. Clinton — they were often relentlessly self-aggrandizing, for example — and yet, as with so many other things, he’s often just better at getting away with it. “Vote for Obama, because he’s the Second Coming of Me in 1992” is an argument that’s almost breathtaking in the audacity of its self-absorption, and yet Bill Clinton — when he’s on his game, as he was tonight — is remarkably good at making such egotism seem more like a magnanimous benediction, kindly bestowed on his Democratic successor. It’s a neat trick, no doubt…and when he goes after the GOP, few in our party do it better.

That being said, I thought even President Clinton’s unparallelled powers of salesmanship and seduction couldn’t sell me a line like “If, like me, you still believe America must always be a place called Hope, then join Hillary, Chelsea and me in making Sen. Barack Obama the next president of the United States.” Not when you spend even a moment remembering anything Clinton had to say about “false hopes” or “fairy tales” over the first six months of this year. But that’s watching the magician’s hands move, isn’t it?

PUMA: Don’t Believe the Hype | Bill & Ed, Sssh.

Looking over the coverage from afar, it seems much is being made at Salon — naturally — of the PUMA crowd (particularly given that tonight is Clinton night.) Well, don’t believe a word of it. I happened to catch this exact same “protest” yesterday afternoon, and there couldn’t have been more than fifty people involved. Frankly, I’ve seen bigger protests by the third party and no party types than I have the stark raving Clintonites, and they don’t seem to be getting any coverage. As far as overt protests by the ex-Clintoners go, Salon, and related media outlets, are trying to make a mountain out of a very feeble-looking and tenuous molehill.

That being said, over in his corner Bill Clinton still seems to be keeping up with his protest of one. “Suppose you’re a voter, and you’ve got candidate X and candidate Y. Candidate X agrees with you on everything, but you don’t think that candidate can deliver on anything at all. Candidate Y you agree with on about half the issues, but he can deliver. Which candidate are you going to vote for?” Honestly, Mr. President, get a grip.

Update: Rendell’s off the reservation too. “Barack Obama is handsome. He’s incredibly bright. He’s incredibly well spoken, and he’s incredibly successful — not exactly the easiest guy in the world to identify with…He is a little like Adlai Stevenson.”