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« Bankster Tim Geithner Faces the Nation (CBS Video & Transcript) | Main | S&L Regulation Heavywieght William Black Charges Geithner, Summers and Obama With Banking Cover-Up (Bill Moyers Video) »
Monday
Apr062009

Bank Bailout News: TARP Oversight Chaperone Elizabeth Warren Slams Tim Geithner Again

TARP Watchdog, Elizabeth Warren, making a hand gesture in reference to Tim Geithner.

The cynical title aside, I'm a huge fan of Harvard's Elizabeth Warren and the work she is attempting to do as the head of the COP (Congressional Oversight Panel) for the first $700 billion of TARP bailouts.  The problem, as I've written before, is she has no juice.  Congress chose to give Paulson a green light and the appointment of Warren to head the oversight panel was mere public relations.

 

She can issue reports, hold press conferences and write editorials from here until 2012, but none of it actually means anything.  If you were wondering why Tim Geithner has avoided all of her questions and accusations, it's because he can.

After testimony last week in front of the Senate Banking committee, the Guardian is reporting tonight that Warren will call for sweeping changes to the Obama administration's approach to the bank bail outs, including the dismissal of mangement at Citigroup and AIG.

From the Guardian:

Elizabeth Warren, chief watchdog of America's $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration's approach to saving the financial system from collapse.

Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade." She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said.

She said she did not want to be too hard on Geithner but that he must address the issues in the report. "The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous."

The report will also look at how earlier crises were overcome - the Swedish and Japanese problems of the 1990s, the US savings and loan crisis of the 1980s and the 30s Depression. "Three things had to happen," Warren said. "Firstly, the banks must have confidence that the valuation of the troubled assets in question is accurate; then the management of the institutions receiving subsidies from the government must be replaced; and thirdly, the equity investors are always wiped out."

Elizabeth Warren criticizes Obama, Geithner, Bush and Paulson

Oversight Panel public hearing last week (video)

Warren testifying before the Senate Banking Committee last week (video)

COP youtube channel

Reuters on COP public hearing

Warren and panel feel snubbed by Geithner

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Reader Comments (12)

MUST READ glenn greenwald piece.

Larry Summers, Tim Geithner and Wall Street's ownership of government

http://www.salon.com/opinion/greenwald/2009/04/04/summers/index.html
Apr 6, 2009 at 1:28 AM | Registered CommenterDailyBail
This is for you AB

Federal Reserve chief Ben Bernanke and Treasury Secretary Tim Geithner are making headlines, but people like John Squier and Dan Fries are in the trenches of America’s economic crisis.

Appraisers like Squier and Fries are engaged in a seemingly impossible job — estimating property values when prices are plunging and relatively few people are buying homes.


http://www.ajc.com/business/content/business/stories/2009/04/05/home_appraise_atlanta.html?cxntlid=patrick.net
Apr 6, 2009 at 1:29 AM | Registered CommenterDailyBail
Geithner channelling Slick Willy again. He is appearing to agree with Warren but she wants the execs fired immediately and he is talking ephemerally about the future.

Geithner Says Government Would Remove Bank Chiefs if Needed

http://online.wsj.com/article/SB123894739672790347.html#mod=testMod
Apr 6, 2009 at 2:24 AM | Registered CommenterDailyBail
More Slick Willy, this time from OBama himself. I am getting disgusted.


The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials.

Administration officials have concluded that this approach is vital for persuading firms to participate in programs funded by the $700 billion financial rescue package.

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040303910.html?hpid=topnews
Apr 6, 2009 at 2:28 AM | Registered CommenterDailyBail
Point of reference, at the top of the AJC link next to the temperature, before the bottom of this cycle the DJIA is likely to converge with the current Georgia pollen count. I'm long Claritin and Krugerrands.
Apr 6, 2009 at 9:47 AM | Unregistered CommenterBridge Loan to Nowhere
More required reading:

http://jameshowardkunstler.typepad.com/clusterfuck_nation/

Closing graf:

"As I've averred more than a few times in this space before, the standard of living in America has got to come way down. We mortgaged our future and the future has now begun. Tough noogies for us. But the broad public won't accept the reality of this as long as the grandees of finance and their myrmidons appear to still enjoy the high life. They've got to be brought down hard, perhaps even disgraced and humiliated in the courts, and certainly parted from some of their fortunes -- if only in lawyer's fees. Mr. Obama pretty much served notice to this effect last week, telling a delegation of bankers in the White House that he was the only thing standing between them and "the pitchforks." It's possible he understands the situation."

"They've got to be brought down hard." Where's Al Davis when you really need him?
Apr 6, 2009 at 11:32 AM | Unregistered CommenterSomething Polish
Thanks DB...Saw that article in the local rag. The real question that was NOT asked was WHY did the lenders SEEK OUT appraisers that WOULD hit the desired value? That was the only way for them to continue to facilitate the stupid lending practices and the pump and dump origination scheme. I am so over it and all this crooked Gov't crap. All the bitching and complaining has gotten us nowhere closer to the truth and it won't ever. There are a few who can see through the clouded veil and most choose NOT to see it. If you feel like an Old Testament Phophet ......it's because you are akin to someone proclaiming the end is near. You are CORRECT and what we are about to witness will be bad....very bad. Think of the anger that will spill out when the truth can NO longer be avoided or covered up. This game does have and end date...I am not saying it's the end of the world but I am saying the economic BS and smoke and mirrors of the past 4 decades is TOAST!
Apr 6, 2009 at 1:18 PM | Unregistered CommenterAin't Bullshittin'
@Bridge Loan to Fantasy Island

"the DJIA is likely to converge with the current Georgia pollen count. I'm long Claritin and Krugerrands. "

Those of the highly-leveraged balance sheet and nasal cavitiy suffer the most. It's a shame more didn't clear the nasal decks before the bust.
Apr 6, 2009 at 2:16 PM | Registered CommenterDailyBail
@ed.meese

Kunstler Nation

Snippage:

My guess is it will first take the form, sometime after Memorial Day (but maybe sooner) of wholesale liquidations of everything under the North American sun: companies, households, chattels, US Treasury paper of all kinds, and, of course, the S & P 500. We'll soon find out whether an organism the size of the United States can run an economy based on one family selling the contents of its garage to the family next door. My guess is that this type of economy won't support the standards of living previously enjoyed in places like Dallas and Minneapolis.

Now Mr. Meese, don't you have some contra work still to do? A job unfinished is not work but simple travail.
Apr 6, 2009 at 2:21 PM | Registered CommenterDailyBail
@ed.meese.polish

Al Davis is in the jungle of Ecuador on a 2-week soul-finding tour with jon gruden.
Apr 6, 2009 at 2:23 PM | Registered CommenterDailyBail
@DB and ed.meese.polish,

As long as Al and Jon are in the Ecuadoran jungle they should visit Baños; it will be an illustrative visit. Much like the US economy it was a really pleasant place to vacation until it was consumed by a hot, molten lava flow of pain.
Apr 6, 2009 at 4:16 PM | Unregistered CommenterBridge Loan to Nowhere
freelance writer
Nov 27, 2011 at 7:21 AM | Unregistered CommenterCecelia29Gonzales

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