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« Sunday Night Links (15 Articles, April 11, 2010) | Main | The Little Dictator: Bernanke On Gilligan's Island (Comedy) »

The Call Tim Geithner Didn’t Make While His New York Fed Watched Over Citigroup (ProPublica Reports)

Tim Geithner

Chalk up another failure at the hands of then NY Fed President Tim Geithner.

There appears to be a factual error with the story.  In the final paragraph the author states Citigroup received $45 billion in TARP funds and $7 billion in additional guarantees.  He was only off by $302 billion.  The FDIC debt guarantee granted Citigroup (that essentially saved the company), when the stock was teetering below $1, was originally for $309 billion.


See also:

Citigroup Bailout Details: Geithner Offers The Shaft To The Sheeple


Ritholtz: TARP Was An Elaborate Ruse To Bailout Citigroup (Video)

Taxpayers Tell Citigroup To Suck It -- Pandit Complies

Citigroup Sells $1 Billion Of Paper Without An FDIC Assist (Comedy Video)


Reprinted with permission

From ProPublica

By Jeff Gerth

The proposition that Treasury Secretary Timothy Geithner, in his prior job as president of the Federal Reserve Bank of New York, didn’t do enough to rein in banking giant Citigroup just gained new support.

On Wednesday, the Financial Crisis Inquiry Commission disclosed that a peer review  study by other Federal Reserve banks in 2005 found that the New York Fed “had insufficient resources to conduct supervisory activities” of Citigroup.

Geithner, who led the New York Fed from 2003-2009, did not seek additional resources in the wake of the study, according to testimony before the commission on Wednesday by Alan Greenspan, who was chairman of the Federal Reserve at the time.

We’ve reported earlier  on Geithner’s extensive contacts with Citigroup officials during his tenure at the New York Fed. In the end, the Federal Reserve was unable to curb practices that led Citigroup to the brink of collapse in 2008 and required a massive federal bailout.

Greenspan said Wednesday that if the New York Fed had not had the resources to do its job, Geithner would have been been on the phone quickly to complain. “No such telephone call or any other communication ever existed,” he testified.

Geithner’s supervision of Citigroup figured in his confirmation hearings to become Treasury secretary. He acknowledged, under questioning, he could have done a better job supervising Citigroup.

A few senators cited Geithner’s handling of Citigroup as a basis for their opposition to his confirmation after ProPublica disclosed that the New York Fed had lifted some restrictions against Citigroup and allowed it to engage in risky ventures with insufficient capital during Geithner’s tenure.

Two months after Geithner’s confirmation, the Government Accountability Office weighed in on the Fed’s handling of Citigroup and other large banking companies. The GAO said the Fed, having uncovered deficiencies in risk-management practices at the largest banking firms in 2006, “did not take forceful action” to correct them “until the crisis occurred.”

The Fed brought no formal enforcement actions against any large institution for substandard risk-management practices before the crisis erupted in the second half of 2007. Nor did it use its confidential process during that period to downgrade any large bank company’s risk rating, according to two people familiar with the process, a step that could have triggered costly consequences for the firms.

The Citigroup bailout required $45 billion in capital and $7 billion in guarantees. Now, whether to give the Fed more power to regulate large financial institutions like Citigroup is a key issue for Congress as it debates legislation to reform the regulatory system.


Write to Jeff Gerth at jeff.gerth@propublica.org


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Reader Comments (11)

Citigroup Sells $1 Billion Of Paper Without An FDIC Assist (Comedy)

Apr 10, 2010 at 12:26 PM | Registered CommenterDailyBail
Apr 10, 2010 at 12:26 PM | Registered CommenterDailyBail
Apr 10, 2010 at 1:32 PM | Registered CommenterDailyBail
Only in America has corruption replaced honesty. What a shame that these people are still allowed to do what they have done. Be proud, all you baby boomers, for you have guaranteed the children & grandchildren of future generations, will inherit a country that is less prosperous along without having the American dream achievable. All because of your greed, lies and being less than you could have been as citizens. What a waste.
Apr 10, 2010 at 4:12 PM | Unregistered CommenterNorman Morley
norman..i understand your anger...and i'm not a boomer...but it's not fair i think to blame the people more than the elected officials...the last 10 years of debt accumulation (federal debt) is a result of an out-of-control congress with no concern for much outside of re-election...there has been very little responsible thinking about the future...some of us have been screaming and fighting about these issues for 20 years and no one has listened...the lobbying/political process is so corrupt that nothing good can come from it...

i think we could do 2 things to dramatically alter the landscape...

1...term limits...

2...ban organized lobbying...

And with those changes, better decisions would begin to flow from DC...
Apr 10, 2010 at 9:13 PM | Registered CommenterDailyBail
@DB i think we could do 2 things to dramatically alter the landscape...

Agreed, I also think limiting elected officials to a maximum of two terms in office is a great idea. Career politicians in positions of power have a tendency to forget who they work for. Dodd, Franks, and Baucus are good examples and Obama is even better. I can't think of any career politicos who have done any good for the general population in a hell of a long time. Ron Paul and and a few others try but they are spinning their wheels against the entrenched corrupt majority. Give them eight years then send them back to being productive citizens instead of parasites.
Apr 11, 2010 at 7:10 PM | Unregistered CommenterSagebrush

Al Gore, the self-styled squeakiest-clean and deepest-green politician in American history, has some explaining to do this weekend. His environmental organisation has taken money to raise awareness about the need for clean water from a controversial chemicals company involved in the aftermath of one of the world's worst pollution disasters.
Apr 18, 2010 at 3:14 PM | Unregistered CommenterZarathustra

H. J. R. 90 Enrolled, House Joint Resolution, -------- MEMORIALIZING CONGRESS TO REPEAL THE FEDERAL RESERVE ACT. WHEREAS, the state of Alabama has a duty to support and defend the Constitution of the United States against all enemies, foreign and domestic; and

WHEREAS, THE Constitution vests in the Congress of the United States supreme power "to coin money, regulate the value thereof and of foreign coin, and fix the standard of weights and measures"; and

WHEREAS, the Congress passed the Federal Reserve Act in 1913 " ...to furnish an elastic currency," and thereby abdicated its duty to the American people to fix a constant lawful value for United States money and thus insure prosperity for honest, law-abiding, productive citizens; and

WHEREAS, the national debt in 1913 was less than TWO BILLION DOLLARS for the entire Nation, while the national debt in 1981 approximates ONE TRILLION DOLLARS; and

WHEREAS, the people of Alabama are suffering the disastrous effects of bankruptcy, unemployment, and privation, when they are ready, willing and able to work for an honest living, but many find themselves unable to do so, for lack of available jobs or capital; and

WHEREAS, the direct effect of the dictatorial control of interest rates exercised by the Board of Governors of the Federal Reserve System has been steeply accelerating and inflationary interest charges, with the consequent and predictable destruction of business, agriculture and industry in Alabama and the Nation; and

WHEREAS, the Federal Reserve Act, Section 19, specifically precludes the State of Alabama from effectively legislating or enacting any lawful ceiling on the extortionate interest rates or usury demanded of our people by the Federal Reserve bankers, thereby immunizing the banks and bankers from any threat of civil or criminal penalty on account of their extortionate monetary demands; and

WHEREAS, the direct effect of the Federal Reserve Act, as amended, is to lay an interest charge upon every single dollar of paper currency which circulates in our State and Nation as a Federal Reserve Note, and it thereby lays an invisible burden on uncontrolled and uncontrollable debt and taxes upon the backs of our people; and

WHEREAS, the United States Government owns no stock in the Federal Reserve System, and the Federal Reserve is not a government agency, and is, in fact, an oppressive and extortionate, privately owned economic monopoly, entirely independent of any real governmental control, except by means of direct legislative action and intervention by the Congress, which established the Federal Reserve in the first place; and

WHEREAS, Section 30 of the Federal Reserve Act provides that "The right to amend, alter or repeal this Act is expressly reserved"; and

WHEREAS, the Honorable Henry Gonzales, United States Congressman from the State of Texas has introduced a Bill, H.R. 4358, in the United States Congress, expressly providing for the immediate repeal of the Federal Reserve Act;

That this body hereby memorializes the Congress of the United States, and especially Alabama's Congressional Delegation, both Senate and House of Representatives, for the immediate passage of this important legislation, H.R. 4358, to the end that peace and prosperity, and the blessings of a Sovereign God may be the lot of our people. RESOLVED FURTHER,
That a copy of the resolution be sent to each member of the Alabama Congressional Delegation,

and to each presiding officer of the United States Congress,

Speaker of the House of Representatives,

President and Presiding Officer of the Senate,

House of Representatives I hereby certify that the within House Joint Resolution originated in and was adopted by the House February 9, 1982.

John W. Pemberton, Clerk. Senate Feb. 25, 1982 adopted

Resolution of the Republican Party of Texas

Restoration of the United States Constitution

Adopted by unanimous vote on June 17, 1995 by the Republican Party of Texas State Executive Committee


Whereas, The Republican Party of Texas recognizes that acts of the Congressional body and the Office of the President of the United States of America created an emergency condition, and that on and after March 6, 1933 and March 9, 1933 the same said Public Offices effectively impaired and suspended the Constitution for the United States of America under pretense of these same created emergency conditions, and that the impairments and disabilities yet exist and are in full force and effect throughout the Nation and several States of the Union as of the date of this resolution"; and

Whereas, there has occurred continuous breach of trust, duty and obligation imposed under authority of the Constitution for the United States of America, resulting in a continued abridgment of the Rights, Privileges, Immunities, and Liberties of Citizens and others, all committed under pretense of a continuing national crisis and furtherance of emergency conditions"; and

Whereas, In the "Foreword" of United States Senate Report 93-549 it states "Since March 9, 1933, the United States of America has been in a declared state of national emergency which has not been resolved during the last 62 years"; and

Whereas, Senate Report 93-549 admits and professes that "This vast range of powers taken together confers enough authority to rule our country without reference to normal constitutional process"; and

Whereas, in Title 12 United States Code it is arbitrarily declared that "The actions, regulation, rules, licenses, orders and proclamations heretofore or hereafter taken, promulgated, made, or issued by the President of the United States or the Secretary of Treasury since March 4, 1933, pursuant to the authority conferred by subsection (b) of the Act of October 6, 1917, as amended [12 USCS sec 95a], are hereby approved and confirmed.. (Mar. 9, 1933, c.1, Title 1, sec 1, 48 Stat. 1.)". We therefore recognize that every order issued by the President since March 9, 1933, or any order issued thereafter was and is automatically approved and confirmed. These powers being conferred under purported authority of the Act of October 6, 1917, as amended on March 9, 1933, are strictly the War Powers, and have been wrongfully used against the several States of the Union and the People (See Stoehr vs. Wallace 255 US 239) ;and

Whereas, our forefathers recognizing these same conditions wrote to the British Parliament and King of Great Britain in The Declaration of Rights of 1774:

"Whereas, since the close of the last war, the British Parliament, claiming a power of right to bind the people of America, by statute, in all cases whatsoever, hath in some acts expressly imposed taxes on them, and in others, under various pretenses, but in fact for the purpose of raising a revenue, hath imposed rates and duties payable in these colonies established a board of commissioners, with unconstitutional powers , and extended the jurisdiction of courts of admiralty, not only for collecting the said duties, but for the trial of causes merely arising within the body of a county

And Whereas, in consequence of other statutes, judges, who before held only estates at will in their offices, have been made dependent on the Crown alone for their salaries, and standing armies kept in times of peace...

Today under pretense of the emergency and reorganization the mischief has been recreated and reinstituted within the Nation and several States of the Union, and has once again left the people without any plain, speedy or adequate remedy, and is wholly contrary to the true original extent and end of the Union and civil Government as ordained and established by the People; and

Whereas, In November, 1994 our Republican State Governors unanimously adopted the Williamsburg Resolve. In it, they said: "The challenges to the liberties of the people... comes from our own Federal government that has defied, and now ignores, virtually every constitutional limit fashioned by the framers to confine its reach and thus to guard the freedoms of the people" and that "Federal action has exceeded the clear bounds of... the Constitution, and thus violated the rights guaranteed to the people"; and

Whereas, George Washington forewarned the Nation and several States of the Union in his 1796 farewell address "If in the opinion of the people the distribution or modification of the constitutional powers be in any particular wrong, let it be corrected by an amendment in the way the Constitution designates. But let there be no change by usurpation; for though this in one instance may be the instrument of good, it is the customary weapon by which free governments are destroyed... "; and

NOW, THEREFORE, BE IT RESOLVED that the Republican Party of Texas being duly apprised of the continuing emergency declared on March 9, 1933, demands that the Gold and Silver Coin be fully reinstated and maintained as the lawful money and tender of payment of debts within the United States of America, and that any and all notes and obligations heretofore or hereinafter issued be brought back to and maintained at par value with the said Coin"; and

BE IT FURTHER RESOLVED that The Republican Party of Texas hereby demands the rescinding of the Emergency Banking Relief Act of March 9, 1933 and all subsequent related acts thereunder and demands a Presidential proclamation declaring the related state of national emergency declared on March 9, 1933 terminated thereby returning the United States of America to its original peacetime Constitutional Republic.

Adopted by unanimous vote on June 17, 1995 by the Republican Party of Texas State Executive Committee

Rep. James A. Traficant

Presented to the House of Representatives on March 17, 1993

"Mr Speaker, we are here now in Chapter 11. Members of Congress are official trustees presiding over the greatest reorganization of any bankrupt entity in world history, the US government. We are setting forth, hopefully, a blueprint for our future. There are some who say it is a coroner's report that will lead to our demise."


Many have tried to awaken the people, yet they have chosen to slumber on...
Apr 25, 2010 at 9:37 AM | Unregistered CommenterS. Gompers
@db jokers

Nothing left to debate. USA republic is bust and Washington Criminal traitor refuse to Scream and why?

So they can bang you all in bust perma debt Hell Pit as you cowards refuse to revolt...LOL

This leads us to the frauds on Wall Street and banking. We have pointed out for some time that Wall Street and banking had turned into a criminal enterprise. They always skated down the edge, but nothing like what we have seen over the past 20 years. Having been in the brokerage industry for 28 years and around it for 50 years we have been in a position to observe it closely. Today it’s massively rife with criminality. The exposure of Lehman’s crimes in hearings has been unprecedented. We wonder how many other firms did the same thing and their actions were covered up by the Fed and the SEC, as well as the CFTC? They are still underestimating debt levels by 40 to 50 percent, which means their focus reports are useless. The spirit of honesty and integrity still doesn’t exist. They are essentially keeping two sets of books and that makes their financial statements useless and fraudulent. That doesn’t bother the SEC, the BIS, the FASB, the Treasury or the Fed; they supervise the lawbreaking. Debt levels are massively understated by keeping two sets of books and by marking-to-model, fantasy, not to market. All of this is a result of the termination of the Glass Steagal Act. It is all fraud, even if the government sanctions it. They are all acting in concert to screw the investor and the public. These people are all criminals. The excuse is that they are too big to fail. It is all fraud no matter which way you cut it. This is a criminal syndicate that should legally be out of business – bankrupt. They are all being bailed out, but we do not see the public being bailed out. The bailout of banking, Wall Street and insurance is still in process and there is no end in sight. There are two sets of laws. One for the Illuminists/elitist and another for us. Congress won’t do anything about it because most of them have been paid off. That is what campaign contributions and lobbying are all about. We espoused these views in university almost 60 years ago, and the only reason our views were tolerated was that we had two uncles who were professors at the university.

Apr 25, 2010 at 11:13 PM | Unregistered CommenterKen
Shut the fuck up Ken...

Fabulous Fab Tourre: The CDO's I Create Are "Pure Intellectual Masturbation"

Gregory White | Apr. 25, 2010, 1:49 PM | 125 |
Fabrice "Fabulous Fab" Tourre has bitten his tongue again, after it was revealed in an e-mail that he likened the debt instruments he created to, "pure intellectual masturbation," according to the Times of London.

Other e-mails also reveal his distrust for the products he was creating, comparing them to "Frankenstein", who famously turned on his inventor.

He also said that his creation was “a ‘thing’ which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price.”

While the SEC's release of a full e-mail between Fabrice Tourre and his girlfriend did much to make the man look more sincere, these latest revelations will heap pressure on the Goldman Sachs market-maker as his Senate hearing looms.
Apr 25, 2010 at 11:53 PM | Unregistered CommenterZarathustra

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