Geithner Just Doesn't Get It

I try very hard to give the folks running our government the benefit of the doubt. It's very difficult, and I realize that it's probably futile in the end, but I do it anyway.

On Tuesday, Treasury Secretary Tim Geithner provided fresh support for the devil on my shoulder, who tells me to just assume that most government officials have precisely no clue.

In an op-ed in The Washington Post, Geithner showered support on the financial reform package introduced in the Senate, and urged lawmakers to push it through into law. While I'm highly in favor of financial reform, and would admittedly rather see something happen than nothing, I'd hoped that high-profile figures like Geithner would speak out on the areas where the Senate bill still falls far short.

Instead, we get an op-ed that does nothing to move us toward good, comprehensive reform. Let's take a closer look at what he had to say.

On consumer protection
The best way to protect American families who take out a mortgage or a car loan or who save to put their kids through college is through an independent, accountable agency that can set and enforce clear rules of the road across the financial marketplace.

This comment makes me wonder whether the Treasury Secretary has higher political ambitions. I've complained in the past that politicians' pandering to voters about those mean and nasty financial institutions has been a bit over the top.

Were legitimate abuses and predatory lending going on? Sure, but this is hardly the top concern when it comes to preventing the next financial crisis.

Too big to fail
As the Senate bill moves to the floor, we must ... push to make sure the government has real authority to help end the problem of "too big to fail."

Last week I criticized Paul Krugman for pooh-poohing the "too big to fail" issue, but here Geithner has done the exact opposite -- treated it like a silver bullet, while ignoring potentially more important issues. Key among them is the dilemma that Krugman (and I) highlighted: The "shadow banking" industry needs regulation.

Lehman Brothers was able to put itself in line for a world of hurt by using ultra-short-term lending to lever itself up to untold heights -- quite literally, thanks to the "repo 105s." While much of Lehman is (hopefully) safely tucked away inside Barclay's (NYSE: BCS  ) , quasi-banks such as Goldman Sachs (NYSE: GS  ) and Morgan Stanley (NYSE: MS  ) were doing many of the same things that Lehman was. And while Citigroup (NYSE: C  ) , JPMorgan Chase (NYSE: JPM  ) , and Bank of America (NYSE: BAC  ) have a steady base of deposits, they do plenty of business in those shadow markets as well.

The banking smackdown
To prevent large financial firms from ever posing a threat to the economy, the Senate bill gives the government authority to impose stronger requirements on capital and liquidity. It limits banks from owning, investing, or sponsoring hedge funds, private equity funds or proprietary trading operations for their own profit unrelated to serving their customers.

It would be really great if this were all true. Unfortunately, it's not. Geithner is correct that the bill "gives the government the authority" to do more cracking down on banks. However, giving the authority is all it does -- the rest is left up to the potentially fickle judgment of whoever's doing the regulating at the time.

As for the rest of it, Geithner is suggesting that the Senate bill actually puts the so-called "Volcker Rule" -- which limits certain banking activities -- in place. In reality, the bill is squishier than SpongeBob on the subject. It merely requires that the government conduct a study to figure out what the impact of such regulations would be.

And while the bill mentions regulators' ability to crack down on non-banks like AIG (NYSE: AIG  ) , that still remains a very cloudy area as well.

Tim getting tough
This is a defining moment for financial reform. We have to get it right. We cannot build a system that depends on the wisdom and judgment of future regulators. Even the smartest individuals armed with the sharpest tools will not be able to find every weakness and preempt every crisis. Instead, the best strategy for stability is to force the financial system to operate with clear rules that set unambiguous limits on leverage and risk.

While this tough talk may sound very Rocky-takes-on-Apollo-Creed, it made me wonder whether Geithner has actually read the bill he's talking about. Most of the major reform areas dealt with in the bill are addressed by giving some council or agency or supervisory board new powers to oversee what goes on, and slap wrists as it sees fit. As far as I've seen, there are almost none of the "clear rules" that Geithner seems to think are so important.

Alas, I've crossed one more public official off my list of the folks I hope will speak out for stronger and more effective reform. But that's just my opinion. What do you think? Is the Senate bill all we need to get the system back on track? Head down to the comments section and share your thoughts.

Apparently, I've been bummed out by a bunch of things lately. Check out why I think dividends are a bummer.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy assures you that no Wookiees were harmed in the making of this article.


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  • Report this Comment On April 14, 2010, at 5:01 PM, Bobmoll36 wrote:

    Agree in large part. And what job in banking will Sen. dodd land after he retires fromthe Senate? Probably as lucrative as Sen. who became a health care lobbyist and not our HRS leader.

    The remedy will be as soft as a baby's tush. Administration from top to bottom get too much money from lenders to do the job right.

    Goldman and Morgan get money from Fed as a bank and only do investment banking. what a joke that is. Bring back Glass.

  • Report this Comment On April 14, 2010, at 5:05 PM, MrDouglass wrote:

    $1M per day lobbying buys a lot of favorable press... The banks got bailed to save "Main Street" but look who is hurting now. $3B in profits this quarter for JPM? They need to force banks to be banks and investment houses to be investment houses, never the two should meet. jmho

  • Report this Comment On April 14, 2010, at 5:09 PM, echthefish wrote:

    Oh, he gets it. He's just owned by the bankers and is going to let them get back to business as usual.

    Watch for another crash ahead while Wall Street continues to syphon money from the system (by the way, that's your money moving rapidly into their pockets).

    I think I'll stop saving and investing and just have with my hard earned money (better me than them).

  • Report this Comment On April 14, 2010, at 5:16 PM, 7351jay wrote:

    Until they start putting some of these bankers and executives in jail for YEARS, they will continue to use us as "toilet paper". Get tough with these people!

  • Report this Comment On April 14, 2010, at 5:28 PM, feadma wrote:

    if only we had politicians with enough spine to do the right thing.

    reinstituting the glass-seagal ( i believe that is what it was called ) act would go a long way in setting the barriers needed to control runaway banking.

    still looking for an honest man!

  • Report this Comment On April 14, 2010, at 5:30 PM, Tinka82 wrote:

    Hi Matt,

    I appreciate the no nonsense look at 'what it says vs. what will be', which is the largest problem with most of our legislation. Looking good on paper and results are often two different things.

    Mr. Douglass and Bobmoll are correct. Bring back Glass Stegall and get rid of the lobbyists. Pull out FIRREA and take a look at what wasn't being enforced prior to creating the new agencies. Lack of enforcement was a large portion of the problem.

  • Report this Comment On April 14, 2010, at 5:34 PM, Tinka82 wrote:

    Agree with Bobmoll and Mr. Douglass.

    Get rid of the lobbyists!! Send them home before you even begin to craft the reform. Glass Stegall needs to be reinstated.

    Finally, let's pull out our copy of FIRREA. Lots of agencies were created, lots of reforms enacted. How much was being enforced? Certainly not much. No more new agencies and councils until we vow to enforce what we have on the books and get rid of what didn't work.

  • Report this Comment On April 14, 2010, at 5:35 PM, PositiveMojo wrote:

    What planet has Geithner been on since 2003? Forming another agency is like bringing in a second team of referrees to a football game because the first group failed to make any calls. The borrower is currently protected by things like a Good Faith Estimate, closing attorneys, appraisers, etc. So - his logic is if the first layer of beauracracy doesn't work, then add another layer.

    His too big to fail argument is totally bogus! Ok - so follow me - was Mexico too big to fail in 1982 when they couldn't pay their debt? Was Greece too big to fail during the past few months? How about Weimar Germany prior to WWII? These are all much bigger than GM or AIG. This is nothing new - period! If a country fails, the currency is devalued and they reschedulet he debt. If a company goes bankrupt, they sell off the assets to others that will hopefully do a better job of managing. It called "creative destruction" Timmy.

    Timmy's "Even the smartest" will have a hard time finding every weakness is again - TOTALLY BOGUS! Here's why. Forget about regulating the company down to the nit - it's impossible and they will have you spinning in circles as you sift through millions of transactions. The only way to make it work is to regulate the PRODUCT before it goes on the street. It's easy for them to analyze the impact of a product and put rules around it. If that had been done with Sub Prime products we would be living in a very different world today.

  • Report this Comment On April 14, 2010, at 5:54 PM, buntyp wrote:

    I also agree in large part, however reference to Krugman, never helps as far as I am concerned.

    A recent Article in the Wahington Post about the 'Obama Team' seeing some lessening of Deficits in the future, is based on the kind of Math Wizardry which these days is the 'In-Thing''.

    The problem I have with Krugman, & others of his Ilk, is that their Idealogical Belief & or Desire, has more often to be served by all their Fuzzy Math, that when they do have a Good Point, Usually Contradicting something they had 'Postulated' before, never bother to connect the dots which may immediately shown some inherent Contradiction in some previous 'Column'.

    The Article I mentioned has had some vigorous debate on-line. However I notice much of the commentary is about some neck & neck horse race between the previous Admin. & this one as to who is the 'Deficit Master', thus losing the whole point about say 'Deficits vs. GDP', or Govt. Revenues as a % of GDP.

    These are the questions which is on the mind of Foreign Creditors, & even more so now as they see the Obama Admin. attempting to spend their way out of all the Problems.

    The % of GDP that the Revenue the Govt. will soon calculate that they are going to need, is reaching un-sustainable levels.

    When you start approaching 25% of GDP for Revenue, & to be 'Footed' by only 50% of the Taxpayers, You are fast approaching the Effect of what many Economists refer to as 'The Law of Diminishing Returns'.

    While only an 'Economic Law'. it has certainly been proved time & again for Thousands of Years.

    But then, as is always the case, the 'Nanny' type Govt, which some Folk are scrambling for, usually expect that 'Nanny's' wages will be paid by someone ELSE.

    Well They, the ones who need their Nanny, should start taking note with regard to 'Capital Flight' & Business Re-location. But again, with people like Pelosi & Reid at the Helm, I would not be surprised if Congress won't soon to proposing Taxing, like say the Chinese, directly, maybe even have an IRS collection Office in Bejing.

  • Report this Comment On April 14, 2010, at 5:54 PM, funkyduane wrote:

    "Still looking for an honest man." ? The ultimate oximoron. Pretty convincing studies have clearly demonstrated that each of us lies to ourselves and others so many times a day it's mind-boggling.

    Silly rabbit, hoping for human beings to be something other than the way we are is completely hopeless.

    When I got that I am a liar, and got it without attaching moral judgement to it, I have never been so free. That is my wish for all. Imagine if all journalists got that there is no such thing as "objective, unbiased" journalism. What a world it would be!

  • Report this Comment On April 14, 2010, at 5:56 PM, mountain8 wrote:

    Let's face it, the American Political Beast will not listen to anything the public thinks. We can't afford a lobbyist. We don't make enough money.

    The only time politicians will listen is when we hit them where they hit us: in the pocketbook. And the Democrats are as full of stupidity and arrogance as the Republicans are and probably the Independents. The only way to get the message across is

    VOTE NO TO INCUMBANTS! PLEASE! SAVE OUR COUNTRY. THERE IS LITTLE TIME LEFT. PASS THIS MESSAGE TO EVERYBODY YOU KNOW.

  • Report this Comment On April 14, 2010, at 6:05 PM, scootrnc wrote:

    Hmmm...Lots and lots and lots of criticism, but where is there here even a single idea about how to "fix" things? Not from this motley bunch...what fools these mortals be!

  • Report this Comment On April 14, 2010, at 6:19 PM, FoolishAdvisor wrote:

    I strongly disagree with Matt Koppenheffer's view that banking reform should be implemented to prevent abuses on Wall Street. If the Wall Street banks were to operate on a responsible fiduciary basis making them accountable to shareholders and government regulation, what would the current management do? They'd be out of a job and on the street. They would be mugging people on every corner street and in front of ATM's. They would have their hands in your pocket every chance they get. http://www.youtube.com/watch?v=8iVCfYQPUUI

    These sleazy homeless bankers have been known to infest homes looking for any cash they can grab. http://www.youtube.com/watch?v=XMOh-kyDhis&feature=relat...

    It has gotten so bad lately, the bankers will come out during the day and rob you blind. http://www.youtube.com/watch?v=Nyrzyd5Rq1Y&NR=1

    So I urge Matt to reconsider. Geithner is doing his best to keep the greedy vermin on Wall St by giving them more money and less regulation. This gets the corruption off of our streets and out of our homes and back to Wall Street where they belong!

  • Report this Comment On April 14, 2010, at 6:29 PM, SJLATTY wrote:

    All in favor of reinstating Glass-Stiegal; remember this government bank bailout urged (or forced) some retail banks to merge with investment banks. Geithner arranged for these institutions to become one, now he is complaining. He is the cause of much of the problem when he ran the NY Fed. He does not do anything about Freddie or Fannie where the real problem is centered.

    The FOOLS should not be fooled.

  • Report this Comment On April 14, 2010, at 6:31 PM, Tinka82 wrote:

    First of all, please forgive the double post.

    Now then, scootrnc, what do you mean 'no ideas'?

    What about looking at the laws we already had in place that aren't being enforced? What about forgetting the lobbyists and starting to look at what would truly work without being strong armed by the operatives from the industries that would be enforced? Reinstate Glass Stegall. Do any of those sound like ideas to you?

    I'm a real estate appraiser. I've got a slew of ideas, but the space isn't here to explain all of them, nor do you need to be put to sleep by the dry workings of documents like USPAP and the failures and corruption of the ASB, AQB and our state appraisal boards. The banking lobby has affected my industry terribly. Andrew Cuomo, God bless his pointed little corrupt head, Fannie/Freddie, TAVMA...

    Timmy Geithner doesn't know the half of the problems that exist in this sector alone, nor does he or any of his cronies writing this bill care.

  • Report this Comment On April 14, 2010, at 7:05 PM, smokyfied wrote:

    Step #1 - Google Glass-Steagall so that you can spell it correctly, Step #2 - Pass an updated version of Glass-Steagall which also closes obvious loopholes such as no regulatory oversight of derivatives and forbids such balance sheet manipulations as repurchase agreements and non arms length transactions between affiliated companies. Break up the big banks. Standardize mortgages - anyone who has ever bought a house knows that it is impossible for the average person to read all the documents to be signed at closing, much less understand them.

  • Report this Comment On April 14, 2010, at 7:14 PM, EarlBerger wrote:

    The difficulty with your article - apart from the claim that you are smarter about these matters than Geithner - is that the articles and statements you criticize may reflect what he thinks he can get support for.

    One of the first things all elected and appointed officials find out when they walk into the building is just how limited their options are in any given set of circumstances. The institutional, policy and public opinion constraints are always much greater than expected, and the need to rally support is unrelenting, unending.and unforgiving.

  • Report this Comment On April 14, 2010, at 7:43 PM, JustinSeine wrote:

    Mr. and Mrs. Mainstream America do not stand a chance against the Lobby Mobs. Our only hope is to enforce single term limits by voting out every incumbent in every election. Since the choice between Democrats and Republicans is nothing more than choosing who is going license the special interests to pick our pockets, I would add that replacements for incumbents be voted in on the Independent ticket.

  • Report this Comment On April 14, 2010, at 8:45 PM, JustinSeine wrote:

    Remember who we are articulating about here! Timmy G., the man who ran the NY FED and used a $40 software package to do incorrectly do his income taxes. "How", one might ask, "would anyone expect the head of the NY Fed to reason that fees paid to him by the IMF would constitute taxable income?" DUH --- He is either dishonest, incompetent or perhaps both!

  • Report this Comment On April 14, 2010, at 8:49 PM, TMFKopp wrote:

    @scootrnc

    "Hmmm...Lots and lots and lots of criticism, but where is there here even a single idea about how to "fix" things?"

    Great point. Simply criticizing and saying "no" to everything only gets you so far (Republican party seems to have proven that in recent times). We need good ideas to fill that void. I hope to have something up soon that does just that.

    @FoolishAdvisor

    "what would the current management do? They'd be out of a job and on the street. They would be mugging people on every corner street and in front of ATM's. They would have their hands in your pocket every chance they get."

    Hilarious.

    Matt

  • Report this Comment On April 14, 2010, at 8:51 PM, TMFKopp wrote:

    @EarlBerger

    "The difficulty with your article - apart from the claim that you are smarter about these matters than Geithner - is that the articles and statements you criticize may reflect what he thinks he can get support for."

    Do I really think I'm smarter than Tim Geithner? I hadn't really thought about it. Smart doesn't always correlate well to making good decisions and I'm quite positive that it doesn't correlate well at all with politics. I'm definitely nowhere near as smart as the folks that ran LTCM and I have yet to cause a major crisis by cratering a huge hedge fund. Heck, maybe Geithner is a whole lot smarter than me and that's part of the problem.

    As for him speaking out on what he can get support for, I think you may be exactly right. Unfortunately, I think he does all of us a great disservice by doing that. We need people in office that have the courage to do what's right, not just what will get them a pat on the back from fellow lawmakers.

    Matt

  • Report this Comment On April 14, 2010, at 9:00 PM, bpan500 wrote:

    Reform with no hope of future enforcement is a fruitless endeavor.

  • Report this Comment On April 14, 2010, at 9:04 PM, xetn wrote:

    The idea that a new regulatory framework will somehow be much more effective than the existing one is just simply stupid. No central planning system is really effective and cannot be because it presupposes that the planner know everything. This is the same kind of bogus reasoning that the Fed is exhibiting by trying to solve a financial crisis (that it is mainly responsible for) by creating massive amounts of debt (government spending) to fix the problem caused by massive amounts of debt. As for the concept of "too-big-to-fail", that was a government construct to move the congress to act, and has no economic basis. It just creates more and greater moral hazard by saving losers at the expense of the taxpayers.

    The best reform of the financial system would be to eliminate all regulations, along with the Fed and the FDIC. This would eliminate the sources of moral hazard, place bankers in real danger of failure. Consumers would again become their own regulators.

  • Report this Comment On April 14, 2010, at 10:23 PM, danwickell wrote:

    With all the talk about enforcing laws, I propose impeaching our erstwhile Attorney General. He has refused to put any members of Congress in jail where they belong. He does not take these "Laws" to the Supremes and have them declared unconstitutional. He is the enabler of all things corrupt. Anyone?

  • Report this Comment On April 14, 2010, at 11:21 PM, artintheair wrote:

    OK, I'll say it again.

    The Bubbles occured and will continue as long as risk is seen as being 'decoupled' from investments.

    Any attempt to regulate derivatives, CEO pay, etc., is doomed to failure - there are a lot of smart guys and gals out there who know how to hide the football.

    The answer? Simple. Bring back the 90% - 70% marginal tax rates on any income over $200,000 per year, just like just after WWII and just before Crash Reagan. Recall, Reagan said, just after the spectacular tax reduction. 'Oooops', and had to campaign to raise it again. G.H.W. Bush was right - vodoo economics at its finest!

    The 'smartest guys in the room' continue to suck the money out of the economy. The United States is NOT running out of money, contrary to Ron Paul's assertion. It is running out of REVENUE, due to fat cat deals in Congress. Why in the world should wall street bonuses be taxes at capital gains rates (15%) when a self-employed $80,000 is taxed at more than that PLUS self-employment taxes of 15+% on top of that?

    I don't believe that Socialism is the answer, nor is any other form of institutionalized communal government.

    We have to stop and determine whether or not the ultrra-wealthy have a right to run our lives and determine our futures. I say NO. A common sense tax policy would cause either tax avoidance (which we have in abundance already, and which can be gotten rid of, immediately) or a conscious, rational re-allocation of profits away from exorbitant salaries and bonuses (by 'captains of industry', of course) towards exploration, research, new products, new industries and JOBS, JOBS, JOBS, ...

    This NOT rocket science. Happy April 15th, Tax Day!

  • Report this Comment On April 14, 2010, at 11:54 PM, Joeinthehouse wrote:

    Just because you say it is so, doesn't mean it is. Last time I looked, the housing market, fed by predatory lending and various conjured risk instruments had a LARGE impact.

    What can be done with the Republicans blocking every sensible item on reform? (check the lobby contributions), I doubt we will get anything useful.

    Blame Timmy as he pulled my butt and yours out of the fire with policies that brought us back from the brink. It ain't perfect, but it is a hell of a lot better than where we were. I have surpassed my value pre-recession. Oh, but that doesn't count. Not your political party?

    Motely Fool is accurate.

  • Report this Comment On April 15, 2010, at 12:25 AM, TheGarcipian wrote:

    There's nothing wrong with going back to the old system, the system we had in place until the early to mid 1990's when Congress (and the banking lobby) starting gutting our financial laws. I'm talking about reinstating the entirety of the Glass-Stegall Act of the 1930's, the law that had kept us from this disaster several times in the past by not allowing these banks to become too big to fail.

    It's really a fairly simple answer: go back to what worked for 60 years!

  • Report this Comment On April 15, 2010, at 1:08 AM, FoolishAdvisor wrote:

    You can have as many regulations as you like, but they mean nothing at all unless they are enforced with serious jail time. Bernie Madoff looks like a boy scout compared to the bankers on Wall St. Bernie didn't lose much money because most of it was paid back to investors at 10% per year, apart from what he skimmed off the top. Latest estimates indicate the loss was $18 billion and affected a few thousand investors. Bernie is now serving a 150 year sentence.

    Goldman Sachs is responsible for well over 20% of the toxic debt that has flooded the world markets, and they are one of the main instigators of this corruption model. They are also responsible for Greece hiding their debt and then bet against them. They also sold their customers "valuable" stocks and then shorted these stocks. They have broken every rule in the book, ethical or otherwise. Their greed has caused trillions of dollars worth of damage. So how many of them are in prison for 150 years? By rights it should be the lot of them. But what wrath did the government dish out to them? The Chinese government probably would have given them a 1 day trial and sentenced them to hard labor or even death. But American justice is different. They reward failure. The American gov't allowed Goldman Sachs to turn themselves into a bank so they can belly up to the taxpayer's trough to get interest free money so they can keep on doing what they do best.

    What is really sad about the economic bailout is, it was all a fraud. Ben Bernanke pleaded with Congress claiming the banking system was just hours away from a total collapse and they needed $700 billion dollars to get the toxic assets off of the banks books. Well, the banks got their $700 billion and their profits soared. They've all made record earnings and paid huge bonuses to their staff, all compliments of the taxpayer. Where is all the fraud in all this? Well, none of the banks paid off their toxic assets. It is still there!

    There are two outcomes from this revelation:

    1) Bernanke lied to Congress and the toxic assets weren't a problem after all and Wall St is behind the 2nd greatest swindle in history. The first swindle was of course issuing all of the toxic assets in the first place. They created derivatives based on derivatives based on derivatives. Who needs a printing press when you can make your own paper out of thin air?

    2) The greed (corruption) in the banks caused them to ignore eliminating the toxic assets and instead spent the money on buying out other institutions to make them even larger - "Really Too Big To Fail". What does this mean? Well, the toxic assets are a ticking time bomb and the banks have only delayed the inevitable. When it goes off, they will be going back to the gov't for more taxpayer's money. And $700 billion will look like chump change by comparison.

    What's the solution? Throwing a dozen Wall St bankers into prison for 150 years will get the message across and will instill fear on Wall St. more than any set of new regulations could. The banks are continuing with the same game plan as before. Nothing has changed. The same players are playing the game and we are in for round 2 by the end of next year. The economy is circling the porcelain drain and there will be nowhere to hide.

  • Report this Comment On April 15, 2010, at 3:33 AM, professorjimB wrote:

    Geithner is one of the bad guys so why would you expect him to behave any differently. He was head of NY Fed when this problem began.

    Bring back Glass-Stegall.

    Bring back pre-Reagan tax rates.

    professorjim

  • Report this Comment On April 15, 2010, at 7:51 AM, Samadd wrote:

    How about - no such thing as too big to fail. This is a capitalist society. First of all, let banks fail. Secondly, guarantee deposits up to a reasonable level - guaranteed by a government agency with power to take all the assets of a failed bank and if that is not enough to cover the deposits guaranteed, then the power to seize all the assets of directors and senior managers of the bank to cover the shortfall and also a percentage of the assets of directors and managers who have left the bank in say the last 3 years.

    If these people want to gamble and pay themselves large bonuses then they should know that their own assets are also on the table. This might just focus their minds.

    Just to mention, government taking over a bank before it has actually failed just leads to protracted arguments as to the value of the bank at time of takeover and the lawyers rake it in once again!

  • Report this Comment On April 15, 2010, at 8:26 AM, explicative wrote:

    No cost for those who caused this economic tragedy.

    You lose the value of your house even when you pay your bills on time, because the profit motive is so great for the wall street bonus crowd. If we have to pay back the debt for bailing them out, then they should have to wait in prison until we do. This will do more to correct these financial problems than all the half assed legislation that politics can create. Take their property and money and lock em up!

  • Report this Comment On April 15, 2010, at 10:35 AM, ARJTurgot wrote:

    Does it occur to any of you that Iceland, U.K., Ireland, France, Italy, Spain, Greece, Portugal, et al, all have similar problems and Geithner/Bernanke aren't the source of them?

    Oh, and by the way, the banks that helped create the Greece mess were French, not Goldman.

  • Report this Comment On April 15, 2010, at 11:33 AM, billd10 wrote:

    Geithner and his predecessor, Hank Paulsen, unashamedly represented the interests of their previous employer, Goldman Sachs, over the interests of the American public and belong in jail. Neither one of them is too bright--especially Geithner, who couldn't fill out a tax return. How can you tell if Geithner is lying? His lips are moving, that's how. Paul Volcker is the only financial person in the administration I would trust to get the appropriate thing done, and nobody listens to him.

  • Report this Comment On April 15, 2010, at 11:52 AM, douloulishi wrote:

    Morgan Stanley (NYSE: MS) wrote in a note to clients on Tuesday that they believe Bank of America’s (NYSE: BAC) share price will increase during the next 45 days, citing a number of catalysts which could drive gains in the company’s stock price.

    Analysts at Morgan Stanley believes that Bank of America’s April 16th earnings release will be surprise investors to the upside. Morgan Stanley places Bank of America’s earnings per share prediction at $0.23 per share, compared to the consensus estimate of $0.09.

    MS believes that Bank of America’s earnings beat will be driven by the consolidation of the company’s card portfolio, which will lift net interest income. If the earnings surprise unfolds as predicted, analysts would be forced to re-rate Bank of America’s stock price to account for the consolidated card portfolio and higher income, which may push the company’s stock price higher after the earnings report

    Finally, Morgan Stanley cites the “capture of two more months of declining card master trust credit losses” as a reason for an improved BAC stock price. If Bank of America’s credit outlook improves, the news would likely be well received by Wall Street.

    http://top-stock-investing.blogspot.com

  • Report this Comment On April 15, 2010, at 1:08 PM, DJDynamicNC wrote:

    @ JustinSein: "Our only hope is to enforce single term limits by voting out every incumbent in every election. Since the choice between Democrats and Republicans is nothing more than choosing who is going license the special interests to pick our pockets, I would add that replacements for incumbents be voted in on the Independent ticket."

    I'm interested in how term limits will solve the lobbying problem. Can you explain the mechanism by which this would be an improvement vis a vis lobbying's outsized influence in our government?

    I'm not being snarky, I'm genuinely curious. I can't see how it would solve that particular problem (or many others either - I think the term limits thing is a visceral "throw them out" reaction that doesn't make much logical sense) but I also haven't put a ton of time into analyzing it and could certainly be wrong.

  • Report this Comment On April 15, 2010, at 1:15 PM, DJDynamicNC wrote:

    @ xetn: You said "The best reform of the financial system would be to eliminate all regulations, along with the Fed and the FDIC. This would eliminate the sources of moral hazard, place bankers in real danger of failure. Consumers would again become their own regulators."

    This is probably the most rosy-eyed view of human nature I have ever heard.

    Successful investors know when to outsource tasks. While I am certainly capable of learning the ins and outs of the legal system, I would still hire a lawyer to review my contracts and argue my case before a court. I am interested in pursuing my career and my hobbies which leaves no time for me to also become a lawyer.

    By the same token, I certainly COULD spend all my time being my own regulator, but given the number of products and services I am exposed to and purchasing on a daily basis, this would effectively consume ALL of my time. This is a task that can and should be outsourced to a professional. And these professionals need the power of law behind them. The Better Business Bureau does a great job, but they don't prevent crises. Proper government regulation does.

  • Report this Comment On April 15, 2010, at 1:21 PM, DJDynamicNC wrote:

    BTW, happy Support America day, everyone! I'm proud to have done my share to equip our troops, secure our food supply, develop our infrastructure, and build our future through education.

    America is still the best investment you can make.

  • Report this Comment On April 15, 2010, at 1:55 PM, JerryMandering wrote:

    Just listen to some of ya!....sheesh. "Government should do this, government should do that....what Timmy needs to do is blah, blah this and blah, blah that....." You people still trust this dolt?!!!! I laugh at you all including the author.

    Did many of you enjoy the Chrissy & Barney Show?....they caused a bunch of this, you know. All the assurances by Frank that things were OK lying thru his teeth the whole time, yet no one holds them accountable....nobody cares about what they are p...aid or what perks they get...no!...but we sure as hell worry about how much some CEO makes and his bonus' and how our good ol' efficient non-corrupt government should get in there and do what they do best.

    Some of you need to look at yourselves, maybe.

  • Report this Comment On April 15, 2010, at 3:23 PM, JNaughton wrote:

    Sorry, but if you're just now crossing Timmy G off your list of people you think will do something useful. you're at least a year behind the times.

    Listen to that devil on your shoulder -- he has the inside track.

  • Report this Comment On April 15, 2010, at 9:06 PM, cajun776 wrote:

    Yes keep them regulations coming\,they all seem so successful just like the new credit card regs that went into effect in January. Untill then my long time Cap 1 card with a rating of 800 was at 9.9% with the new regs now 17.89% Wow talk about stimulus. Yes, boys and girls we're going to be talking about regulations 'til the cows come home. Please someone name the ones that work. Sec, Fema, Freddie, Fannie and the list goes on; we will run out of letters soon, just keep a look out behind you when the new ones go into effect.

  • Report this Comment On April 16, 2010, at 9:15 AM, Rich9988 wrote:

    1) Given that even this relatively toothless measure is being opposed by the Republicans in lockstep, what chance does more meaningful reform have? Getting meaningful reform passed is more of a political problem then anything. The Republicans are of course totally in the pockets of the people being regulated, and the Dems aren't far behind.

    2) for those that decry regulation and government in general, a few regulations to consider: a) laws against murder are regulations that impinge on personal freedom, as are most laws. Are you against them? b) in sports there are rules (read regulations). These make the game possible and are sometimes there to protect the players. Are these good or bad? 3) Do you have the capability of analytic thought? It seems to be exceeding rare in certain quarters these days. Instead we get wonderful talking parrots who sit in front of Fox "news".

  • Report this Comment On April 16, 2010, at 11:00 AM, goldilocks52 wrote:

    Where is the button for "do not recommend this article?" This sounds like a lot of negativity and no substance to me.

  • Report this Comment On April 16, 2010, at 12:54 PM, dph192 wrote:

    The elephant in the room is that leveraged, creative mortgages were allowed to violate common sense, common law and common practices:

    1. the reselling of these assets amounted to fraud, given the implied risk level of "mortgages". How about a bill that defines Mortgage as an explicit loan agreement with documented (and validated) collateral/equity, payment terms, and borrower credit level. Any bundled rollup of mortgages would have to itemize the breakdown of these basic value/risk parameters.

    2. not all borrowers were "fooled" by the usury-style terms of leveraged mortgages, but how about simply regulating truth in advertising that you can't use the word "mortgage" for zero-interest, zero-equity, balloon-payment contracts? Call them "Property Swaps" or something, and NEVER let the government subsidize these.

    3. Individuals are already protected by bankruptcy laws. Perhaps tweak these so that leveraged creditors have weaker repayment rights than legitimate ones and let the market price the package. Legitimate home buyers could be protected from being thrown out on the street, speculators would be on their own.

    4. Seems to me too-big-to-fail corporations are also covered by existing bankruptcy laws - let's use our Government Experts to build contingency plans so that when a big boy fails we can chop them up and get them on the auction block in weeks, rather than taking years.

    5. Finally, just take the common-sense rules for underwriting casualty insurance and apply it to insurance for financial instruments - don't allow AIG style con artists to "guarantee" value on non-diversified pools unless they can show the cash to actually back it.

    When you represent a low-value, high-risk product as being a legitimate, reasonable investment it's simply fraud. If there's a loophole preventing us from jailing the perpetrators, let's simply close that loophole and let the chips fall.

  • Report this Comment On April 16, 2010, at 12:55 PM, dph192 wrote:

    The elephant in the room is that leveraged, creative mortgages were allowed to violate common sense, common law and common practices:

    1. the reselling of these assets amounted to fraud, given the implied risk level of "mortgages". How about a bill that defines Mortgage as an explicit loan agreement with documented (and validated) collateral/equity, payment terms, and borrower credit level. Any bundled rollup of mortgages would have to itemize the breakdown of these basic value/risk parameters.

    2. not all borrowers were "fooled" by the usury-style terms of leveraged mortgages, but how about simply regulating truth in advertising that you can't use the word "mortgage" for zero-interest, zero-equity, balloon-payment contracts? Call them "Property Swaps" or something, and NEVER let the government subsidize these.

    3. Individuals are already protected by bankruptcy laws. Perhaps tweak these so that leveraged creditors have weaker repayment rights than legitimate ones and let the market price the package. Legitimate home buyers could be protected from being thrown out on the street, speculators would be on their own.

    4. Seems to me too-big-to-fail corporations are also covered by existing bankruptcy laws - let's use our Government Experts to build contingency plans so that when a big boy fails we can chop them up and get them on the auction block in weeks, rather than taking years.

    5. Finally, just take the common-sense rules for underwriting casualty insurance and apply it to insurance for financial instruments - don't allow AIG style con artists to "guarantee" value on non-diversified pools unless they can show the cash to actually back it.

    When you represent a low-value, high-risk product as being a legitimate, reasonable investment it's simply fraud. If there's a loophole preventing us from jailing the perpetrators, let's simply close that loophole and let the chips fall.

  • Report this Comment On April 16, 2010, at 2:52 PM, DJDynamicNC wrote:

    @ cajun776 - do me a favour and read the comment directly below yours, from Rich9988. I think that sums it up nicely.

  • Report this Comment On April 16, 2010, at 7:45 PM, quietjohn wrote:

    The proposed legislation is no more about financial regulation that the health care bill was about health care. It is about expanding government control.

  • Report this Comment On April 16, 2010, at 7:47 PM, 1022ThirdAvenue wrote:

    Ok, so we beat up on the traders and CEO's of Wall Street, complain that Tim G. "does not get it", and plead for laws that allow the courts to throw the "fat cats" in jail for 150 years.

    Simply put: that will not fix the problem.

    It used to be that common sense said that one should not buy a house for which the payments, including taxes, insurance, etc., exceeded 1/3 of annual wages. Mr. Joe Sixpack decided that he could afford a house for which these payments exceeded 80-90% of his annual wages, creating a situation in which a two-income household could no longer hold the line, and then he used that house as an ATM to buy toys like motorcycles, snow mobiles, 4-Wheelers, ski boats, bass-fishing boats, and new SUVs.

    Well, the bill came due and Mr. Joe Sixpack threw up his arms and walked away.

    Investors enjoyed the heady days where 20-30% annual returns on the portfolio were expected: all of which was driven by consumer debt, which was, in turn, based upon the expected increase in home equity.

    The bottom line is that we, yes, you and I, created this mess by gorging and expecting that the bill would never come due.

    Wall Street, like those buffet restaurants, just accommodated our glutenous ways.

    I now invest only in companies that are not dependent upon a consumer-debt driven economy. Companies that make products that we need; rather than products that we want.

    Live modestly, invest well, and stop blaming everyone else!

    Nathan A. Busch

  • Report this Comment On April 17, 2010, at 12:17 PM, coolcruzn wrote:

    Nathan I couldn't agree more with your last statement... Live modestly, invest well, and stop blaming everyone else!

    This blame everyone else and all that Anti-Government rhetoric or cr@p will soon wear off as excuses and mask for individual truths and personal responsibilities.

  • Report this Comment On April 18, 2010, at 2:44 AM, bevet wrote:

    I agree with professorjim,

    Bring back Glass Stegall and

    Bring back pre-Reagan tax rates

    I would also add:

    Do what is needed to ensure enforcement of Glass Stegall, and

    Dump Geithner in favor of a Treasury Secretary who is more attuned to the needs of Main Street instead of Wall St.

  • Report this Comment On April 18, 2010, at 7:36 PM, tvjunkie2 wrote:

    So, with this proposed reform, bankers and their brokers will still be able to sell loans to folks who can't afford them, and then sell them off to other idiots like IKB in the Abacus deal and not suffer any reduction in fees? Too funny.

  • Report this Comment On April 19, 2010, at 3:29 PM, smikey055 wrote:

    Geitner is a timid weakling, at best, who fears what he does not know, and hides it all behind his liberal gibberish.

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