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Jan. 8 2010 - 9:24 am | 3,490 views | 5 recommendations | 51 comments

Geithner’s In The Soup

AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.

via Geithner’s Fed Told AIG to Limit Swaps Disclosure Update3 – Bloomberg.com.

Sure everyone saw this. Geithner apparently telling AIG to soft-pedal the disclosures about counterparty payments post-bailout.

The House Democrats should be ashamed that it took a Republican member to dig this out. Between owning the individual mandate on health care and allowing the Republicans to seize the moral high ground on the bailouts, the Democrats have just set themselves up to lose a good decade’s worth of elections.


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  1. collapse expand

    But Geithner, like Napolitano, may not be in the soup at all as far as the Administration is concerned. Even if he were, he’d be replaced by someone just like him.

    Progressives keep challenging Obama to draw a line in the sand–somewhere on something. What I’d like to know is when progressives themselves draw a line–first on Obama and then the Democratic Party. And how about Americans in general drawing a line on the two-party system?

    Speaking of lines, one was crossed 4 or 5 decades ago. Our political system just stopped working, and the country’s long and now well-documented decline began shortly thereafter. Eisenhower was the last guy who, despite several bonehead blunders on his part, was a big enough character with just enough brains to occasionally knock the system back into some semblance of functionality. Since then, every president has been partly (LBJ, Nixon, Carter, Reagan) or wholly (the Bushes, Clinton, Obama) a creature OF the dysfunctional system–which, incidentally, very much includes mainstream media.

    So, enough with the diagnoses. What do we do about it?

    • collapse expand

      Amen! I, for one, am sick of the Monday morning quarterbacking. Let’s take our own Progressive ball and go home to build our own vision with a real candidate who represents our values. Never again will I vote for someone who’s “electable”. Instead, I’ll vote my conscience and values.

      In response to another comment. See in context »
      • collapse expand

        In the 2004 election I voted for General Lord Cornwallis (The Patriot) because he told one of his lieutenants’ “that ‘rabble’ are our brethren, and after we defeat them we will reestablish commerce with them.” Bush needed to beat the crap out of Iran, Iraq and Afghanistan and then show them the path to democracy/free enterprise. I think this is where so many presidents have gone wrong — they need to do whatever is necessary to win whatever war they find themselves in; unfortunately all the presidents who have fought wars/police actions, etc since WW11 don’t seem to have really made a conscious decision to win no matter what the cost, and I think that’s why we haven’t won a war in so long.
        In an interesting aside: Vietnam is now very much a free enterprise country, and we are doing business with them. And then there’s Korea — it’s just a matter of time before we are fighting them again. What’s that saying? Those who fail to learn from history are doomed to repeat it?

        In response to another comment. See in context »
    • collapse expand

      to begin with, stop voting. All it does is perpetuate this very corrupt system.

      In response to another comment. See in context »
    • collapse expand

      Too true. The diagnosis has been easy, but the treatment is a bitter pill to swallow: Abandon the Democrats for third-party/independent candidates that better represent progressive values. Yeah we’ll play the “spoiler,” but hopefully with the stones to stand up and say we’ll keep “costing” you these elections (that you seem to think you’re so entitled to) until you start taking progressives and the progressive agenda seriously.

      It’s fine to say we need to erode the two-party system, but that’s not making it a reality. So exploit the two-party system and force them to pay attention to the so-called fringe. This is historical effective with the Liberty/Free Soil parties of the abolitionist movement, the Socialist/Progressive parties of the late 19th-early 20th century along with Eugene Debs, and the National Women’s Party, largely responsible for the 19th amendment. You think any of these groups gave a damn about the delicate balance of two-party politics?

      In response to another comment. See in context »
      • collapse expand

        The comments on this comment are tending to crazy, statist, fascist nonsense, so I thought I’d stop that right here.

        STATE’S RIGHTS are the issue.

        You are never going to convince the Utah Mormons that the NYC transgenders are right to be so, OR VICE VERSA.

        Trying to force half the country to live like the other half has been the cause of most of our misery as a people.

        Let the Californians be crazy Left, and the Utahians be crazy Right.

        Hell, break it down on a county by county, city by city level. A county can go alcohol-free or prostitution-legal, so why not for other things, like abortion or marijuana?!

        Community standards are the only thing that should be enforced by local cops and sheriffs. Why not acknowledge it and quit wasting resources fighting the river?!

        If we wanted to all be the same we’d do what North Korea did.

        STATE’S RIGHTS, people.

        In response to another comment. See in context »
    • collapse expand

      Pelham,
      What can we do about it? For one I believe the establishment is slowly being dismantled, thus the current malaise and the severity of the malaise. The so called leaders of this country know that time is ticking against their machine and this is why such a large land grab for socialization and control. As the younger generation is still heavily swayed by the completely biased media, the adult population has slowly seen all the hopes and promises of our government are nothing more than false hopes to keep all the moronic constituents believing in something that does not exist. See our government is run like a large casino, where by fat cats with close knit ties get all the perks and the rest of us are just throwing our money and assets their way. But like the casino’s the game only works as long as there are idiot players that still play knowing that all odds are stacked against them. See all odds are stacked against those that do the right thing in this country. We are told to live by the law, by a home, put 20% down, save for retirement and all will be good. Well as we have seen over the last decade that this charade by our government is nothing more than a cover up for globalization which is nothing more than an outright theft of American standard of living. Like all games of finance there are winners and losers. Basic Americans,(those that work for a living), have to play by the rules and thus playing by the rules means we are at the mercy of the terrible decision making by our elected leaders. Our elected leaders have sold out and continue to weaken our democracy. Thank fully guys like Matt that call it like it is, can really make a big difference, by forcing people to really stop and think about, what the hell is going on. Now if our goal is to raise the standard of living around the globe, a great humanitarian effort indeed, then fine, but as Americans are we willing to lower our own standard of living for such an enviable task? I think not. It is not America’s job to transfer wealth around the globe, it used to be that America stood for opportunity and freedom, boy how that has changed.

      In response to another comment. See in context »
  2. collapse expand

    “Between owning the individual mandate on health care and allowing the Republicans to seize the moral high ground on the bailouts, the Democrats have just set themselves up to lose a good decade’s worth of elections.”

    Amen. But no worries, I’m sure the establishment Dems along with the cable news networks will find a way to put their future electoral losses on the progressive, saying this was a backlash for overreaching on a “too liberal agenda.”

  3. collapse expand

    “Sure everyone saw this.”

    don’t watch MSM; but i’ve heard that this story was largely ignored. i’m so surprised.

    give turbo-timmy a break, though; the guy had his hands full covering thine ass & unpaid back-taxes.

  4. collapse expand

    No, oddly, that one’s not getting much traction. Ironic, isn’t it, that the Democrats won’t actually lose elections because of things that they should be criticized for? No, they’ll lose them but because the Republicans will keep yelling “Republicans keep you safer!” until just enough people actually believe it.

    Rudy Guiliani, today: “There were no domestic terrorism attacks during the Bush Presidency; there’s been one during Obama’s already.”

    We laugh, but they rely on collective amnesia and the Rovian power of simply repeating bullshit until Mr and Mrs America hear it coming out of their television, radio, walls, ceiling, and the all important “everyone just knows” collective orifice until it ’struth.

    • collapse expand

      You’re right, this is something the Democrats ought to be held accountable for, and is one of the few things that can’t be attributed to that “magic frictionless can Bush kicked down the road.”

      It’s not the sort of thing that will get traction, though, because the general public has already been put to sleep by the vapor trail of zeros in the deficit, the bailouts, the health care tab, and the future Medicare obligations. “Billion” is the new “thousand.”

      And that’s sad.

      In response to another comment. See in context »
    • collapse expand

      He who screams the loudest …..

      Rudy Guiliani, today: “There were no domestic terrorism attacks during the Bush Presidency; there’s been one during Obama’s already.”

      Yeah the Dems in power blew this one also but jag-off Rudy got to witness first hand the most lethal terrorist attack on our country, non-domestic, under who’s watch?

      In response to another comment. See in context »
  5. collapse expand

    It’s not surprising at all that the Democrats weren’t interested in fishing this out, because the entire focus is on making sure there will be a “legacy” with the passage of the health care reforms.

    Yet, in chasing that legacy, they’ve given up on placating the moderates, and sold out their base who had been assured there was a mandate for Universal Single-Payer Medical Manna From Heaven. The Democrats will find a lot of internal rumbling from the die-hard left who feels sold out by this administration.

    And the public is starting to see there is no halo, no internet-generation idealism and hope and change — just a group of old-school Chicago politicians pulling the levers behind the curtain.

    There’s no place like home… There’s no place like home…

    • collapse expand

      With any luck this will lead to a state’s rights revolution.

      Let the Californians be crazy Left, and the Utahians be crazy Right, I say. Just STFU with the infantile, hopeless attempts to change other people’s behavior with legislation.

      Hell, break it down on a county by county, city by city level. A county can go alcohol-free or prostitution-legal, so why not for other things, like abortion or marijuana?!

      Community standards are the only thing that should be enforced by local cops and sherrifs. Why not acknowledge it and quit wasting resources fighting the river?!

      If we wanted to all be the same we’d do what North Korea did.

      As I’ve been saying: “Embrace diversity! …Somewhere else!”.

      In response to another comment. See in context »
  6. collapse expand

    When the system is this broken, the scales this loaded in favor of the moneyed and well-connected, is there any way to affect significant change besides violent revolution? Not meant to be rhetorical, I really don’t know…

    And then, we run into the problem that as a culture we are so complacent to divide our time between working for a just-enough-to-scrape-by paycheck and voraciously consuming bullshit food, bullshit media, and bullshit drugs, that I don’t know if we have another revolution in us.

    I never expected to find myself the crazy guy in the comment thread, but here I am. I am in despair.

  7. collapse expand

    I’m with Thomas Fishman. I don’t know what to do anymore. I haven’t voted for a D or R in a general election since 1992, but it’s obvious that most people are too mind locked into the 2 party system to do the same.

    As sick as it sounds, I gave a little cheer every time the market dropped during the crisis. Though a new Great Depression would have been horrible to go through, it just might have served to wake people up to the shithole that is DC, and to the possibilities of doing things differently. It may have lead to a new dedication to progressive reforms, in which case we could have come out of it a better nation. We may have a Palin lead teabagger system of god and guns, thus showing people the horrors that would be unleashed from this scenario and possibly leading to progressive reform by a longer route. One thing’s for sure -it would have lead to SOMETHING!

    Alas, it was not to be. Our leaders simply threw another band-aid on things and kept themselves and the system from harm. And it will probably go on like this to the point where the inevitable crash will be too big to recover from.

    Too pessimistic?

  8. collapse expand

    I’ll agree with you that the Dems should be ashamed that they are being bested by a member of the GOP. A big part of the problem is that since both sides engage washing the backs of big business to return favor for campaign contributions, it’s easy for the minority party to find something to pin on the side in power.

    I don’t think that this can be pinned on Geithner this time, although the Fed has some ’splainin’ to do. You can argue all you want that Geithner had influence, but both the NYT (http://www.nytimes.com/2010/01/08/business/economy/08aig.html?th=&emc=th&pagewanted=all) and Bloomberg’s current article tell that he was not in the thick of things:

    >”Meg Reilly, a spokeswoman for the Treasury, said that Mr. Geithner “played no role in these decisions and indeed, by Nov. 24, he was recused from working on issues involving specific companies, including A.I.G.” ”

    earlier in the Times article:

    >”The New York Fed said on Thursday that it was offering advice, not orders, and that the second reference was irrelevant and did not apply to the transaction that A.I.G. was describing in its regulatory filing.”

    That’s probably how they’ll squeak by, unless someone can do hard digging – for information, and in questioning during testimony.

    Backing up alittle more

    >” “When an organization is troubled, it actually makes disclosures of this kind more important,” Mr. Seligman said.

    >Others disagreed, saying that bank and insurance regulators normally keep their discussions with struggling financial institutions private, to keep from inciting runs. There has always been tension, one securities lawyer said, between banking regulators, who want to resolve problems behind closed doors, and the federal securities laws, which compel disclosure.”

    How they’ll get around Maiden Lane III is another matter that may or may not play out in the media.

    While the Dems are setting themselves up for a grand demise in the Fall, the replacements probably won’t be any better – as markbolton suggests, probably worse. As I said at the outset, both parties are engaged in the same operating procedures, so then the Dems can find this dirt on Republican hands.

    Thus I share the other posters’s frustrations. Most people are so busy trying to make ends meet they don’t have the time or will to add to this fight. Sadly, if we had enough destitute people, a real ideological revolution would be more probable because they’d have next to nothing to lose.

    Some how, we as a nation need to pull the plug on money in politics. Hell lobbyists are so great at arguing for a cause, if they were permanently out of work, they could use their super powers of persuasion to make a real difference. They’d have plenty of back-up in legions of disenfranchised who want tangible change and have the skills to spread the message.

  9. collapse expand

    Seriously, why should citizens care who wins elections between the Democrats and Republicans? We’ve seen what happens when each controls the House, Senate and White House, and I see no reason for a repeat performance in either case.

    We need a president — surely he or she would have to be from a third party — who doesn’t weigh every one of his actions against the effect it will have on the next election. When members of Congress fret to the president about upcoming elections, I want a president who says, “And I care why?”

    Another commenter mentioned revolutions of the past which were violent. If we had a violent revolution today, what would be the objective? To allow citizens to vote? We already have that. Should citizens rise up to take away our own right to vote? “We demand a dictator! Military junta or death!”

    One of the main reasons for what we have now, in my opinion, is the demonization of our two main political parties. Most voters so hate and fear one of those two parties and see the other as the only way to combat the “evil” party. You know, can’t waste your vote, right?

    Anyway, I have given up. I voted for Obama over Hillary because, along with a couple other issues, he said he would not mandate health insurance. Well, he’s mandating health insurance. What’s the point of this 24/7 political coverage? It’s a sham, no more legitimate than American Idol or Dancing With The Stars. I’m not saying this out of anger, just as a statement of fact. It’s all a waste of my time. Informed citizens? Why bother? I vetted Obama, went with him, then he does an about face on every issue of importance.

    Someone asked what could be done about the situation? Just laugh it off. I’ll do that and go back to voting third party and feeling superior about being above it all. That might not sound like much, but it’s the only way a realist is ever going to find any political contentment whatsoever.

  10. collapse expand

    Perhaps a bit too concise, Matt. Regardless, there seems to be some perceptive comments.

    However, for those averse to NYTimes (as I’ve somewhat become) there is a wealth of pertinent information elsewhere. For those that haven’t seen it, I think this article from yesterday by Yves Smith…

    http://www.nakedcapitalism.com/2010/01/ny-fed-told-aig-to-hide-details-of-swaps-payouts-to-banks.html

    …and this follow-up by Edward Harrison lay bare the egregious actions by all the involved parties.

    http://www.nakedcapitalism.com/2010/01/geithners-dubious-aig-cover-up.html

    There are equally stimulating comment threads to both.

  11. collapse expand

    Once upon a time in a land far, far away malfeasance and misfeasance in office would result in censure, resignations and, perhaps, indictments and convictions. No more. It appears that our current Democratic Overlords have learned a thing or two from the Bushies. Stonewalling will eventually make the current “cries for something to be done” go away. At least until the next time.

    Nothing will happen to Geithner (no matter what he does) because he’s doing exactly what the Obama and his DLC goons want him to do.

  12. collapse expand

    I just read a potentially very interesting piece via nakedcapitalism.com. Perhaps Matt and others will find this legal action worth following. There may even be some “hope” after all.

    Goldman Sachs Directors Bled The Bank Dry, Shareholder Says

    http://www.courthousenews.com/2010/01/07/23425.htm

  13. collapse expand

    Oh hum, next thing it will be that Michelle O’s insurance job was subsidized by AIG….through backdoor contracts. But I like Matt’s insistence…which could lead to insouciance, eh?

  14. collapse expand

    “Geithner’s In The Soup”

    Well get the fucking waiter to take it out then.

  15. collapse expand

    Well, there’s some good news: SIGTARP has opened an investigation into this.

    Now let’s see if anything comes of it.

  16. collapse expand

    “Waiter, there is a Geithner in my soup!”
    “Well drag him to the side of bowl and bail out the rest then.”

  17. collapse expand

    Geithner is a pawn. Its the bigger problem that is controlling Obama and both political parties….that is destroying our country. GL Matt. We will see how much courage you have.

    http://kliguy38depression2news.blogspot.com/

  18. collapse expand

    Everyone knew Geithner was a crook when he was hired to dismantle the peoples’ Treasury Department….that is why Obama hired him and congress confirmed him…they knew he was a crook, nobody wanted an honest man in the Treasury

  19. collapse expand

    Revealing this is what got Dylan Ratigan fired by CNBC.
    Calling for an investigation into Emanuel’s actions involving fraudulent reporting of profits by Fannie Mae when he was honcho there and joining with Norquist in doing so has earned Jane Hamsher at FDL the ire of lefties.
    Everything surrounding the theft that has been going on by both parties almost forever needs to be investigated and if that makes for weird alliances, so be it.
    People in this country need to start recognizing their class interests before we’re all sleeping in tents.

  20. collapse expand

    There certainly are a lot of Chicken Littles in this comments thread. You know, historical context with a pinch of levity might do you guys some good. There has been just as much fear experienced by every generation. Yours is not the worst, it is simply the most recent.

  21. collapse expand

    At best, the government’s bailout of AIG demonstrated extremely poor judgment. Paying 100 cents on the dollar for the CDS market was assine given the only other option available was bankruptcy.

    At worst, President Obama and his economic team, Geithner included, are protecting their money & power base. Either way, this kind of conduct cannot be tolerated.

    Since we haven’t really had democracy in a while, I am not worried about it’s downfall. Students of history can confirm that economic freedom is the main driver of any change. Now that our economic freedom has been put at risk, now and into the future, anything goes.

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