Timothy Geithner

Only A Taxpayer Would Mistake Tim Geithner For A "Banker"

Moe Tkacik | April 21, 2009, 3:11PM

Too often a tedious standoff between the somnolent/dry and the grandstanding/gratuitous, Congressional hearings about the financial crisis have nevertheless produced a few moments of existential clarity. (We refer, obviously, to the time in December when Maryland Rep. Elijah Cummings asked Neel Kashkari if he was a "chump", which was surely a question on the lips of anyone who had glimpsed the then-TARP overseer's high school yearbook photos.)

But Treasury Secretary Tim Geithner's appearance before a the TARP oversight panel this morning yielded a similarly exchange when AFL-CIO Associate General Counsel Damon Silvers dared to accuse Geithner of being a "banker":

Partial transcript after the jump.

Read more »

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (0)
Topics: Elizabeth Warren, Jimmy Cayne, Timothy Geithner

Bailout

Eilzabeth Warren On Daily Show

Zachary Roth | April 16, 2009, 1:01PM

Last night, Elizabeth Warren, the Harvard Law professor who chairs the Congressional Oversight Panel for the bailout, talked to Jon Stewart on the The Daily Show.

Here's part 1:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Elizabeth Warren Pt. 1
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

And here's part 2:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Elizabeth Warren Pt. 2
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (11)
Topics: Bailout, Elizabeth Warren, Financial Crisis, Wall Street

AIG

Warren: Fire Top Management At AIG and Citi

Zachary Roth | April 7, 2009, 5:25PM

We're late to this, but it looks like Elizabeth Warren, the Harvard Law professor who chairs the Congressional Oversight panel for the TARP funds, is upping the ante.

After several months of raising the alarm about the Treasury Department's failure to attach strings to the bailout funds, to little apparent effect, Warren will issue a hard-hitting report this week that broadly indicts the Obama administration's approach to the financial crisis, reported the British paper The Observer over the weekend.

Read more »

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (34)
Topics: AIG, Bailout, Citigroup, Elizabeth Warren, Financial Crisis, Treasury Department, Wall Street

John Sununu

Have Oversight Panelists Complained About Sununu's Conflict? Sounds Like It...

Zachary Roth | March 27, 2009, 5:21PM

Remember that little conflict of interest problem for John Sununu that we revealed last month?

The former New Hampshire GOP senator, who sits on the Congressional Oversight Panel that monitors the TARP funds, was recently named to the board of a firm that's a subsidiary of Bank of New York Mellon -- which not only got TARP money itself, but also administers the program for the Treasury Department.

Sununu insisted to the Associated Press, which picked up on our report, that this really wasn't a conflict. But it looks like at least some of Sununu's fellow panel members disagree.

Read more »

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (10)
Topics: Bailout, Elizabeth Warren, Financial Crisis, John Sununu, Wall Street

AIG

Warren: Is AIG Bailout Money Going To Pay Off "Speculators"?

Zachary Roth | March 11, 2009, 12:31PM

Looks like you can add Elizabeth Warren to the growing list of people who want the federal government to tell us more about that latest AIG bailout.

Warren, who chairs the panel that's monitoring bailout spending on behalf of Congress, went on MSNBC's Rachel Maddow Show last night, and all but demanded more disclosure from Treasury Secretary Tim Geithner.

Maddow raised the fact that AIG has reportedly passed bailout money onto its counterparties on those credit default swaps, and that it currently has four PR firms on its payroll. In response, Warren, appearing perhaps more frustrated than in any of her other numerous media appearances over the last few most, responded:

It doesn't seem strange to me, and the fact that it doesn't seem strange to me tells you something really awful about what it's been like to be in Washington for the last few months.

These financial institutions have figured out that they're bleeding red ink, and their best solution is to persuade the Treasury Department to give them lots of money. And when the Treasury Department starts to say, there may be some problems here, the American people don't want to go along with this, then lets see if we can spin the American people on it.

The Treasury Department has not asked for the critical information about where this money has gone, from AIG. We've poured the money into AIG, and it has somehow poured it out the other end. The Treasury Department has not asked, and has not revealed, what it is that's happening with that money.

And so as long as that's the case, maybe some of the money is going to other financial institutions. Maybe some of the money is going to pay off these credit default swaps that are essential for saving other institutions that have counted on it for credit and insurance. And maybe some of where this money is going is just off to speculators, who just played the game of speculation, and would now like to collect a hundred cents on the dollar form their speculations, and collect it indirectly from the American taxpayer.

You can see the video here. (The excerpt quoted above begins around the 9:00 mark.)

The Federal Reserve, which has been at the center of the latest AIG bailout, has declined to reveal much information about the maneuver, including the identity of AIG's counterparties, saying that doing so could affect confidence in the institutions at issue.

Reports by Warren's panel have grown increasingly critical of Treasury's level of transparency and accountability in regard to the bailout.

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (18)
Topics: AIG, Bailout, Elizabeth Warren, Federal Reserve, Financial Crisis, Tim Geithner, Treasury Department, Wall Street

John Sununu

Sununu Sits On TARP Oversight Panel, And On Board Of Firm Owned By Bank That Administers TARP

Zachary Roth | February 28, 2009, 12:00PM

John Sununu, who serves on the Congressional Oversight Panel monitoring the government's bailout program, has joined the board of a subsidiary to Bank of New York Mellon -- a firm that, in addition to receiving bailout funds, has been hired by the Treasury Department to administer the program.

Given that the Congressional Oversight Panel (COP) is charged broadly with assessing how the TARP program is working, in order to help Congress determine whether to continue injecting capital into the financial sector, the arrangement would appear to create a significant conflict of interest for the former New Hampshire GOP senator.

On Wednesday, the investment firm BNY ConvergEx Group announced that Sununu had joined its board of governors. "His experience as a thoughtful leader and champion of innovation makes him an ideal match for ConvergEx's entrepreneurial spirit," said company chairman Joseph Velli of Sununu.

According to its press release, the company is an affiliate of Bank of New York Mellon (BONY). Founded by Alexander Hamilton in 1784, BONY received $3 billion in TARP funds back in October -- less than some Wall Street firms, but not chump change.

Just as significantly, it was also picked to be the master custodian for the bailout funds. According to reports, that means it's charged with handling accounting and record-keeping for the program, and even with tracking limits on executive pay at banks that got TARP money.

Sununu was appointed to the COP by GOP Senate leader Mitch McConnell in December -- a little over a month after he was defeated by Democrat Jeanne Shaheen in his bid for reelection to the Senate.

Sununu's conflict, then, appears clear. As a member of the COP, he's in part responsible for evaluating whether taxpayers got a good deal through TARP, and for assessing whether Treasury and the banks are doing enough to track the bailout money, as well as whether banks are using the money to make loans, as they were supposed to. On the broadest level, COP's job is to help Congress figure out whether the TARP program is working as it should, and how to adjust it going forward. It's not hard to see how that responsibility could conflict with his activities as a member of the board of a company that both administers the TARP program, has received funds from it, and could potentially be in line for more.

In his work on the panel so far, Sununu has hardly been an advocate for taking a hard line on the banks. Earlier this month, the COP, which is chaired by Harvard Law professor Elizabeth Warren, released a report detailing the kinds of far-reaching reforms to bolster the financial regulatory system that the crisis has pointed up the need for. But Sununu and the panel's other Republican, Rep. Jeb Hensarling didn't sign on. Instead, they attached their own alternative report, that recommended an approach to financial regulation that was more friendly to Wall Street, and emphasized the need to rein in Fannie Mae and Freddie Mac, the government-backed mortgage firms.

No one answered a listed number for Sen. John E. Sununu in Portsmouth, New Hampshire.

We've also contacted COP to ask whether Sununu discussed his ties to Bank of New York Mellon with panel staff. And we're hearing there's more to this story ... so we'll keep you posted.

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (32)
Topics: Bailout, Elizabeth Warren, Financial Crisis, John Sununu, Treasury Department, Wall Street

Bailout

Another Government Report Finds Treasury Is Screwing Up TARP

Zachary Roth | January 30, 2009, 12:08PM

Another day, another earnest report finding that the Treasury has messed up the bailout.

A new GAO report on issues of "transparency and accountability" in the TARP program finds that Treasury lacks "a clearly articulated vision" for TARP and "has made limited progress in ... communicating an overall strategy" for it.

From a summary of findings:

Treasury has continued to develop a system for detecting noncompliance with key requirements of the program but has not yet finalized its plans. Further, Treasury has made limited progress in formatting articulating and communicating an overall strategy for TARP, continuing to respond to institution- and industry-specific needs by, for example, making further capital purchases and offering loans to the automobile industry. In addition, it has not yet developed a strategic approach to explain how its various programs work together to fulfill TARP's purposes or how it will use the remaining TARP funds. While GAO does not question the need for swift responses in the current economic environment, the lack of a clearly articulated vision has complicated Treasury's ability to effectively communicate to Congress, the financial markets, and the public on the benefits of TARP and has limited its ability to identify personnel needs.

Several previous reports, some from TARP's Congressional Oversight Panel have had similar findings.

So it's not like we didn't know any of this. But it's worth being reminded, as often as possible, just what a mess of this program the federal government has made so far.

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (1)
Topics: Bailout, Elizabeth Warren, Treasury Department, Wall Street

Henry Paulson

Warren On Tracking Bailout Funds: "This Isn't Rocket Science"

Zachary Roth | January 9, 2009, 3:54PM

During her interview on CNN, Elizabeth Warren got to spend a little less time dealing with inane knee-jerk responses from anchors, and a little more time explaining the crux of the issue: that the Treasury Department isn't tracking its bailout spending.

Some excerpts:

This isn't rocket science. This isn't some strange thing we're asking for. If you're gonna take that much money from American taxpayers, you've gotta have the banks tell what they're going to do with it. We have to have some way of telling if its working. and if you don't have accountability, if you don't have metrics in place, you're really just kind of handing it out there and hoping for the best.

And:

Treasury did not say: tell us what you're going to do with the money. Tell us how you used it. That just hasn't happened. There's no basic accountability in the system.

Warren also laid out the intriguing idea of establishing a product safety commission for financial products, just as we have for toasters, car seats, and other consumer products.

And she ended with an Eliot Ness-like pledge to keep up the fight. Asked by CNN's Tony Harris whether she'd continue to try to track the bailout spending, she replied, with brio: "You bet!"

Here's the whole thing:

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (12)
Topics: Bailout, Elizabeth Warren, Henry Paulson, Treasury Department, Wall Street

Bailout

Warren Panel to Treasury: Do More To Limit CEO Pay

Zachary Roth | January 9, 2009, 1:17PM

As for the issue of limits on executive pay, which Congress insisted on including in the TARP, the Warren report says:

While some executives at some financial institutions have voluntarily reduced their compensation, there is no uniform program in place. Treasury has the power to set the "terms and conditions" of any purchase it makes using the TARP funds.

Treasury had opposed the limits from the start, arguing that they would discourage banks from participating in the program.

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)
Topics: Bailout, Elizabeth Warren, Henry Paulson, Treasury Department, Wall Street

Wall Street

Treasury: You Never Said We Had To Make Banks More Consumer Friendly!

Zachary Roth | January 9, 2009, 1:10PM

In places, the panel appears outright angry -- understandably -- at Treasury's stonewalling on key questions:

The Panel's fourth area of inquiry focused on what financial institutions have done with the taxpayer money they received. As indicated in question 1 above, Treasury appears to believe the question is beside the point because their goal for the CPP is to stabilize the financial system and to restore confidence in financial institutions.

This, they believe, will eventually increase the flow of credit. Treasury argues that there are several reasons why the TARP investments will be slow to produce increased lending: (1) The CPP began only in October 2008, and the money must work its way into the system before it can have the desired effect. (2) Because confidence is low, banks will remain cautious about extending credit, and consumers and businesses will
remain cautious about taking on new loans. (3) Credit quality at banks is deteriorating, which leads banks to build up their loan loss reserves. For example, Treasury notes that the level of loan loss provisioning by banks doubled in the third quarter from one year ago. Treasury seems to be suggesting these larger trends may be obscuring the effect of TARP funds. The Panel understands the reasons why measurement of banks' use of TARP funds may be difficult.

Nevertheless, the Panel believes such direct measurements at the level of individual TARP recipient firms are important for determining the extent to which the funds are having a direct benefit to businesses and consumers.

And the report highlights Treasury's amazing unwillingness to require banks that get government money to take actions that are in the public interest:

[T]he Panel asked whether Treasury's actions preserved access to consumer credit, including student loans and auto loans at reasonable rates, and
whether Treasury was taking action to ensure that public money could not be used to subsidize lending practices that are exploitive, predatory, or otherwise harmful to customers. Treasury answered that its TARP programs to preserve access to consumer credit do not involve encouraging or mandating banks to take consumer-friendly actions with respect to credit cards or other consumer loans. (our itals)

PERMALINK | COMMENTS | RECOMMEND RECOMMEND (8)
Topics: Bailout, Elizabeth Warren, Henry Paulson, Treasury Department, Wall Street