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Bob Dole: Bank Nationalizer Sheila Bair Putting The"Compassion" Back In Conservativism
One of the great ironies of this financial crisis (and there are lots) is that the only financial regulator remotely capable of inspiring confidence in anyone is a Republican Bush appointee who's gone largely ignored by the White House since Tim Geithner reportedly tried to push her out of her job for not being enough of a "team player." We speak of course of FDIC Chairman Sheila Bair, who has gotten so much practice nationalizing financial institutions since the crisis began she let 60 Minutes come watch and record one for a segment earlier this month. And now she's been pushing for the authority to take her operation to the likes of AIG, Bear Stearns and the rest of the Too Big To Fail cartel. (And as finance blogger Felix Salmon explained in the New York Times today, she may get her wish as part of Geithner's public-private toxic asset buyout plan.)
On Wednesday Bair went on the hyperconservative supply-side pundit Larry Kudlow's CNBC show to sweetly explain why, when a company like AIG fails, she ought to be able to
come in, repudiate employment contracts, pick and choose who you want to keep, who you want to get rid of, what you want to pay them. Replace the management, get rid of the boards, bring in better management and do an orderly unwinding of the entity.Kudlow seemed stunned. "You've done this before?" he asked. (About 50 times since the crisis began.) But he remained polite in the face of all this suspiciously socialist-sounding rhetoric -- because it came from a Republican. Her old mentor Bob Dole even confirmed it, an American Banker report today reveals...
"Sheila's from Kansas. We're not loaded with rich people, just a lot of hard-working farmers and small-businessmen eking out a living. So she understands that people need help fixing their problems...With Sheila it's not just, 'somebody lost their home, isn't that a shame?' She's been saying, 'How can we prevent it or delay it?...That's compassionate conservatism. How can people be critical of that?"Good question we're happy to answer! Back in October, as Wachovia was collapsing under the weight of toxic synthetic mortgages and the like, Bair was in the final stages of engineering a last-ditch deal for Citigroup to buy most of the bank, with government help, for two billion dollars, when Wells Fargo offered more money to take over the entire bank without public assistance. Bair steered Wachovia to the better deal, since that was the bank's fiduciary responsibility to its shareholders and Bair's civic duty to us taxpayers, but Citigroup, where Bob Rubin was still on the payroll and the payroll was not yet being financed by his old protege Tim Geithner, was royally pissed.
But since then Bair has made friends with the likes of Barney Frank, Chris Dodd, Ben Bernanke and Caroline Kennedy, who just bestowed upon Bair -- along with a colleague from her days at the Commodity Futures Trading Commission named Brooksley Born, whose repeated and strenuous attempts to regulate derivatives in 1998 were blocked by the aforementioned Bob Rubin -- a "Profile In Courage" award for her public service.
And now Tim Geithner, down to his last fifty billion dollars in TARP funds, may find himself befriending Bair as well -- because it's the FDIC's $500 billion lending facility with the Federal Reserve he needs to draw on to offer the non-recourse "Legacy Loans" to money managers as incentive to buy up some of those toxic assets. That means Bair will in effect be charged with insuring the loans extended to said money managers -- and like most insurers not named AIG, she believes in conducting due diligence before handing out guarantees. The agency is now publicly seeking advice from the financial community on how best to execute the program, and earlier this week there was even talk that she might be next in line for Geithner's job.
Bair has started to gain support, even from those who once considered unseating her, sources said.You gotta wonder at this point if "sources" = Geithner.
Josh
Zachary
This sounds like a change we can believe in.
March 27, 2009 11:03 PM | Reply | Permalink
Not only should Bair replace Geither as Treasury Secretary -once lil Timmy is sent back to the private sector -we can swear in him & Paulson and maybe find out what happened to the first 350 billion of our taxpayer funded TARP these bunch of Bush holdovers gave out to all of their buddies at Goldman Sachs - while we are at lets have Bob Rubin under oath too .
( Apologize for the run on sentences - but I am fixing to have to go to work and I am to angry about this "to big to fail mess' to have to worry about good grammar. My first pick up in my one van charter business this Saturday morning is at 5:30 AM -and I am totally fed up with these wall street retreads pissing away my tax dollars with no fix for this economic mess- )
As for Ms Sheila Bair - you go girl friend -and if Kudlow gives you any crap we will send Jon Stewart over there to defend & protect you ..
March 28, 2009 5:05 AM | Reply | Permalink
When was Geithner ever in the private sector in the traditional sense?
From 1988-2002 he worked from the Treasury in various roles. Then in 2002 he went to work for the Council on Foreign Relations, and in 2003 he went to the Fed. Please don't group him in with Paulson who made $500,000,000 working for Goldman. Timmy could probably be a $10 mill a year guy in the private sector but has chosen to work for the greater good for $500,000 a year.
Just because you are unemployable and have to drive a van doesn't mean you need to insult public servants who are trying to unwind the sh*t they were left with.
March 28, 2009 10:18 AM | Reply | Permalink
i5kfun...
Geithner was it has been reported widely a private financial consultant - do not have his CV at hand - But to the broader point Geithner was at the table when Paulson completely disregarded the intent of Congress with the first installment of the TARP money -and bailed out all of his buddies at the too big to fail banks - and AIG .Geithener also was trying to play a sleight of hand regarding the retention bonuses for all those crooks at AIGFP London . For crying out loud Cassano used to work for Milken !
BTW -its my own business my charter van and me ,I have had employees, been an operations manager , and much prefer to be in business for myself. And if I ran my little business off a cliff like these masters of wall streets have done - I sure as hell would not expect Geithner or any body else to use your tax dollars to bail me out .
One more point I ponder - why is it so important to protect the counterparties identities in the AIG melt down ? Is Geithner afraid to tell me that he used our tax dollars to bail out foreign banks ? Its been speculated that there might be some very interesting indivduals on that counter parties list -like former Sen Phil Gramm- and his wife Wendy - But its my bet that New York Attorney General Cumo, and the AG in Connitecut will be getting all those counter parties names - And also will be finding out why AIGFP never had an internal or external audit .
No sir much rather have Mrs Bair looking after my money and economic recovery then a fellow who was at the table when Paulson cut his deals with the bankers - guess Bear Stearns did not agree to the vig so Paulson with Geither help killed that bank.
Yep Treasury Secretary Bair would make me whole lot less angry about my hard won tax dollars being squandered on institutions to big to fail ...
March 28, 2009 6:07 PM | Reply | Permalink
So you can just make up stuff about Giethner and feel okay about it? What does Cassano have to do with this? Cassano left AIG in Feb. 29, 2008 and his $1mill/month retainer has stopped, so what does he have to do with Geithner? What does the NY Fed President have to do with a shop in London? Also they have released the counter parties from the initial funds.
I can see why no one would hire you, you are very loose with your facts and have no ethical qualms with smearing public servants because you disagree with prior policies. I can see why they are having a hard time filling the spots in Treasury, with people like you out there who would want the job?
March 28, 2009 8:25 PM | Reply | Permalink
i5KFUN,
What Cassano has to do with Geitener staying on as Treasury Secretary is that the AIGFP shop in London made very sure that there were no internal or external audits. AG Cuomo has opened an investigation into whether or not there was fraud committed by Cassano & others at the London office . In my opinion a viable and professional Treasury Secretary would have done further due diligence before approving anymore of these "retention bonuses" , especially since the bonuses that Paulson approved previously become politically "radioactive " once they were made public. I was not aware that all the counterparties have been made public - if they have I would be grateful if you could tell me where to go and see the complete list of the AIG counterparties.
And again I certainly am not a financial expert , nor do I pretend to be one on this thread. But given the enormormity of the financial meltdown -and just how much money we the taxpayers have ponied up - it just seems to be that Bair is much more forward leaning in protecting the taxpayer .
Besides the AIGFP bonuses really are a distraction from the real problem the trillions of dollars of toxic assets that we are being asked to puurchase with no real clear plan to reimburse the taxpayers . I would direct your attention to the post by Dwight_Schrute at 4:05 PM - he says it all right there.
I simply believe that we need to stop the nationalization of all the risk , and privatization of all the profits. I also believe Cassano and all the others in that outfit committed fraud -and an active criminal investigation being mounted by Coumo will tell us why Cassano's section was never audited.
And your ad hominem attacks on my "employability " are kind of an amusing distraction to this whole debate about whether Geithener should stay on as Treasury Secretary -perhaps thats all you really got to support Geithner staying - And again I am not an expert -but I did hear one day on the CSpan Frank congressional hearings that Ben Bernanke thought that they Federal Reserve should have known how toxic the swaps had become at AIGFP -and when he heard of the bonuses he too was dismayed .
But again Dwight is right the Wall Street people who embezzeled , defrauded etc should be in prison -and I bet Ms Bair would also agree with that -
March 29, 2009 9:35 PM | Reply | Permalink
Thanks for not addressing the issue of you making sh*t up about Geithner. As for the substance of your latest post you are right about one thing, you are certainly not a financial expert. You should look into the different roles that different government organizations have. If you want to focus on the fraud at AIGFP have at it haus! The DOJ should be the ones going after that fraud - Sec. Geithner is responsible for keeping the financial system afloat, not for prosecuting fraud.
March 29, 2009 10:25 PM | Reply | Permalink
Well 5k if there was honest oversight being done by Geithner's Treasury perhaps there would have been a referral to DOJ by now regarding at least a preliminary investigation into all these "PEERS OF THE REALM " Wall Street movers and shakers taking all of this money from us.Endemic fraud perpetrated by wall street does not help keep our financial system afloat does it ?
And again you pick and choose what points I raise in our little "tete a tete " here -the bonuses are just one part of a larger scandal - our financial markets are in tatters because 'best practices' were thrown out the window . A good start to remedy this cluster f---ck we the taxpayers now find ourselves in would be to reinstate the Glass Spiegel Act - which would-as I understand it - among other things make sure that enough cash reserves were held to underwrite risk being taken - so 5k does Geithner support returning to best practices that were in place before this meltdown ? And I was hoping that in between insulting me you might provide the link to were we can go to find the complete list of AIGFP counterparties you state have been released ,,,,
and I see now where Paulson has come out in support of Geithner - that sure makes me all warm & fuzzy since Paulson was he who gave out 350 billion of our dollars to his wall street buddies with zero transparency or oversight ..
March 30, 2009 5:13 AM | Reply | Permalink
It is up to Congress to pass the laws, and Geithner to enforce them. He cannot enforce laws that do no exist. He cannot investigate the breaking of laws that do not exist.
For the counterparties I was assuming you were a frequent reader of this site and had seen the link yourself, you can have a look here http://www.talkingpointsmemo.com/documents/2009/03/complete-list-of-aig-counterparties.php?page=1 Note that is only the first $52Billion, as I said "Also they have released the counter parties from the initial funds."
March 30, 2009 9:06 AM | Reply | Permalink
5K ,
there are laws on the books right now that make fraud a crime , and I guess I misread your post regarding the counterparties -its only a preliminary list right ? Anyway you are starting to sound like another former 'guest ' here at TPM -james dd... so I am signing off on this discussion and respectfully say we need to agree to disagree-unless of course you are not done with your sophomoric insults you seem to enjoy spewing -but that will not be responded to from this post forward either...
March 31, 2009 5:06 AM | Reply | Permalink
I just did not appreciate your smearing of an honorable public servant like Tim Geithner with made up lies because you are mad that you have a shitty job. It is just not right to demean the man like that, just not right.
March 31, 2009 10:29 PM | Reply | Permalink
5k ...
I have a great job -
And I said nothing about Geithner that was not public record - he was part of the Paulson teams sending out the first 350 billion TARP dollars with zero oversight - plus he was also hiding the AIGFP bonuses before they were made public.
I say make Mrs Bair Treasury Secretary -and while we are at it convene a grand jury to probe fraud associated with the tax dollars already been pissed away at the attempted bailout of AIG...that had no OVERSIGHT in the previous administration ...
April 2, 2009 9:05 PM | Reply | Permalink
"One of the great ironies of this financial crisis (and there are lots) is that the only financial regulator remotely capable of inspiring confidence in anyone is a Republican Bush appointee..... "
is this an irony or a reflection on our young Treasury, changing their economic proposals 5 times and presiding over a witch-hunt and denying any prior involvement in bonuses?
March 28, 2009 10:37 AM | Reply | Permalink
I think Geithner is getting an unfair rap in terms of his reputation publicly. However, his conflicts with Bair have been worrisome and I'm glad Obama had the foresight to keep Bair on.
As for Bair going to Sec. of Treasury? That's actually quite likely. Especially if Summers gets Bernanke's job. Geithner will simply become the head of the Obama's National Economic Council, and Bair will go to Secretary of Treasury. That's two goods and one bad (Summers as Fed Chairman). Although, from what I've been hearing Obama's been impressed by Bernanke's response thus far, and once his term expires, he may ask him for another, thus muting Summers from that position.
March 28, 2009 3:49 PM | Reply | Permalink
How can you act so heinous
When you spent all that time
enhancing your penis?
March 28, 2009 6:29 PM | Reply | Permalink
As a great man once said:
WHAT!!!
;0)
March 30, 2009 7:02 AM | Reply | Permalink
I have mixed impressions of Bair. My first impressions from TV spots last fall were very positive. But later takes made me cautious. Her interview with Kudlow is pretty empty at least in transcript form.
March 29, 2009 2:14 AM | Reply | Permalink
So the solution to the crisis is having the government replace AIG as the guarantor of bad debt? That's raw idiocy. AIG didn't have the collateral to back up its promises to insure this uninsurable debt and neither does the government. We already have over $11 trillion worth of debt and its growing daily. The Wall Street people who embezzled, defrauded, looted and gambled away everyones money should be put in prison for life, but that will never happen because they're still able to buy people off.
March 29, 2009 4:05 PM | Reply | Permalink
No! The answer is to take all of AIG's assets and divide them up among AIG's creditors.
Then, if any of AIG's creditors are also defunct, take all of their assets and divide them up among their creditors.
Continue until there are no more defunct creditors left.
Hard, but the only way to get to the bottom of this complete debacle.
This continued protection of defunct companies, bad business practices and rip-off artists using taxpayer money has got to cease.
.
March 30, 2009 9:27 AM | Reply | Permalink
That would be a good plan if the 2005 bankruptcy law was not passed. That law effectively put the CDS counterparties at the head of the line, in front of the insurance policy holders who had been responsible and where there actually was collateral. We are not bailing out the counterparties, but instead we are bailing out the insurance side of the business. Because of the 2005 bankruptcy laws the counterparties to the CDS would have first shot at the $$ that still exists in the insurance side of the firm - so they would have gotten paid either way.
March 30, 2009 11:48 AM | Reply | Permalink
If that bankruptcy law was changed in 2005, it can be changed in 2009.
March 30, 2009 2:58 PM | Reply | Permalink
No, CDS instruments are merely contracts which can be ruled null and void if they violate public policy.
"bailout" money should not flow to crooks or gamblers. Guarantees should not be invented after the fact. I'm pretty much with Johann on this.
March 30, 2009 4:57 PM | Reply | Permalink
I get the idea that one of the major benefits of Ms. Blair is that she isn't nearly the integral part of the ol' boy network that the other people in the Treasury and associated agencies are. I realize that Geithner isn't as much an integral part as Paulson, but he still is part of the apparatus and does not want to get on the wrong side of the Masters of the Universe.
So rather than say that Ms. Blair exhibits compassion, I would substitute integrity.
March 30, 2009 12:48 PM | Reply | Permalink