May 28, 2009

The Indispensable Geithner

By J.C. Arenas

Timothy Geithner was portrayed as the indispensable man, but now no matter how much the media continue to flack for him, he's still kissing the floor.

The Treasury Secretary aimed to cure the ills of the financial system by extracting toxic assets from bank balance sheets, replenishing the banks' capital resources, and bolstering the housing market to prevent further foreclosures so normal lending could resume.

Let us take a look at what he has "accomplished" thus far.

First, following a controversial vetting process and uninspiring beginning of his tenure, the Treasury Secretary finally struck fools gold after he utilized remnants of Henry Paulson's plans and created the Public-Private Investment Program to remove banks' toxic assets. The Dow rose, calls for his resignation ceased, and Newsweek immediately declared "Geithner Hits His Stride".

But the plan has been delayed because he hasn't garnered the support he had hoped for from the private entities needed in order to represent the private part of the program.

Second, Geithner has been erratic about exactly how much more capital he has at his disposal to infuse the banks while arguing at the same time they were solvent and fully capitalized.

The Potemkin model stress tests produced "largely encouraging results", but forget the fact that the banks are still undercapitalized and insolvent -- by billions of dollars -- and regulators are closing them at their fastest rate in years.

Did you get that? The banks need a lot more money, but they're doing well, when they're not. Got it?

Third, his plan to help refinance mortgages was -- in his words -- supposed to "show results quickly", but the plan was considered futile two months after its initiation. The mortgage companies have complained that the program is too complicated to set up and homeowners have had difficulty getting in touch with lenders or qualifying for the program. Ultimately, the criteria had to be expanded to include unemployed and upside-down homeowners to strengthen the program, and we're still being urged to "be patient."

So much for those quick results. Geithner further declares that "we're changing the things people couldn't change for decades.

Right, all this "change" yet lending still remains "severely depressed".

Only ignorance towards the failure of the Treasury Secretary to even instill some level of confidence that he can restore the viability of our financial system, would allow us to arrive at Politico's latest conclusion, " Timothy Geithner Gains New Strength".

The media can't detail anything that Geithner has actually done that could refute an assertion of failure up to this point, so they've retreated to style over substance -- the insignificance of his temperament and ideology. The "equanimity under fire" he has displayed would be celebrated if he were a relief pitcher for the Nationals, and his "life is about choices" mantra would suit a Hugh Prather calendar, but who cares?

Let us not forget that 60 Senators looked past a multitude of serious transgressions and confirmed Geithner because he was deemed "uniquely qualified" to handle the challenges of this recession attributable to the nation's deteriorating banking system. Despite the facts to the contrary, we're still subjected to the same nonsense. As a financial services industry spokesman told Politico:

Geithner's real ace in the hole [is] "He's one of a small, select group of people who could even be treasury secretary right now. If not him, who else?"

The initial problem was that we didn't look at all of the options. It was somehow pre-determined that it was Geithner or bust.

Rather than learn from that mistake, we are expected to further our obstinacy and ride him until his wheels fall off.

How could we believe in the delusion that an ineffective Geithner has miraculously managed to "hit his stride" or "gain strength" while the nation's struggling economy has been further weakened by pejorative measures?

Welcome to the new Orwellian America.

The media's inclination to celebrate the incongruence should remind us that they will go to any extreme to depict the glass that is the Obama Administration as forever half full and the principal figures will be praised even as they succeed in failing.

Forgotten is the fact that Geithner's failures imperil our future.