Treasury: Still Going Nowhere

To lose one deputy treasury secretary might be considered a misfortune; to lose two -- and both before they are even officially nominated, no less -- looks suspciously like carelessness.

George Stephanopoulos has the depressing news:

Democratic sources say that H. Rodgin Cohen, a partner in the New York law firm Sullivan & Cromwell LLP, and the leading candidate for Deputy Treasury Secretary, has withdrawn from consideration.
It's the third withdrawal of a top Treasury Department staff pick in less than a week...
Democratic sources said that an issue arose in the final stages of the vetting process.
As one source put it, "it's back to the drawing board."
Cohen had risen to the top after the withdrawal last week of expected deputy treasury secretary pick Annette Nazareth.
Nazareth was forced to withdraw from consideration for the deputy treasury slot because senators made it clear she would face tough questioning over her time at the Securities and Exchange Commission.

Deputy treasury secretary is a huge and important job: it's the position that Larry Summers held when he appeared on the cover of Time as part of the Committee to Save the World. But it seems that the very experience which qualifies any given person for the job is also liable to disqualify them.

What's even more depressing than the difficulties filling these positions is the weird way in which the Obama administration is pushing the line that there isn't a problem here at all:

Obama administration officials have pushed back hard at critics who argue that failure to fill key Treasury Department positions is hampering their response to the economic crisis.
The administration has argued that they have more appointees in place than previous administrations and have done big things: housing, stimulus, and the beginning of their bank plans...
Foreign Policy reported yesterday that Britain's most senior civil servant, cabinet secretary Sir Gus O'Donnell, claimed it was hard to find anyone to speak to at the US Treasury Department.
He blamed the "absolute madness" of the US system where a new administration had to hire new officials from scratch, leaving a decision-making vacuum.

O'Donnell is right, and the Obama spin doctors are wrong. The fact that Treasury has failed to fill substantially all of its senior political positions, four full months after Geithner was nominated, is a national scandal. We're not impressed by Geithner's vague sketch of "the beginning of" his bank plan; we want a bank plan! And we want it a couple of months ago, before Citigroup stock dropped below $1 a share on utter uncertainty about what on earth was going on or might happen.

I'm not sure how much of all this can or should be blamed on Geithner personally, but the fact that economic policy seems to have been taken over by Larry Summers doesn't help, and Geithner simply doesn't seem to have the force of personality which will persuade both Wall Street and the general population that he knows what he's doing. He started off with quite a lot of goodwill, and he's lost that entirely; now that it's lost, I don't think he can regain it. It's a truly sorry state of affairs.

Comments

[samwise:]

and your point is? how about if they stuffed it full of ardent Stalinists? would it make any difference? of course not. the problem is not one of "staffing" and "staffing scandals"(???)--the problem is of a policy so flawed that it is clearly yielding one of the greatest national catastrophes in American history. But don't listen to me--it's Warren Buffet who called this "Pearl Harbor." (He then went on to add the need to "work together" on economic policy. Maybe if he spent some time husking some of that corn he'd know how that'll turn out!) Ask yourself--what happened on December 7, 1941 that is relevant to today's problems? One word that does stand out is "SURPRISE!" I thought in the world of all you smarty-pants you'd at least be able to point out the obvious. WE'RE LONG PAST THE FINANCIAL CATASTROPHE ALREADY THERE "TOUGH GUY."

Mar 15 12:31 PM

[mac.barron:]

Geithner is a turd. As optimistic as I try to be and as much faith as I have always had in our Nation this worthless, cheating, cretinous shell of a human call all into doubt.

Take your money and invest it overseas. There is little hope for the United States, or its Dollar so long as this pathetic scapegrace has his hands on the controls.

Mar 15 12:47 PM

[kruser53:]

Warren Buffett likened the current situation to a war. The last president from Illinois to fight a war was Lincoln. Old Abe went through a number of commanders for the Army of the Potomac, with fair and poor results until he finally got Ullyses Grant, who won the war the old fashioned way: he worked hard and ground out victories.
The first general who failed Lincoln (and was the biggest failure of all because his failure to attack allowed the Confederacy time to assemble a bigger army and increase fortifications)was George McClellan.

Is Gaithner Obama's McClellan? It can be debated. One big difference is that McClellan rapidly built and trained an army that could have overpowered the Confederacy quickly in late 1861 or early 1862. But he refused to attack. So far, Gaithner (with the help of Obama) is not building an army quickly. But on the attack front, he is looking more and more like a Gen. McClellan.

My complements on a good article.

Mar 15 01:00 PM

[LBX:]

"Treasury: Still Going Nowhere"

This headline is misleading.

The treasury is being emptied pretty good by the Administration.

As fast as the US can borrow, and as fast as the money can be ladled out to the bailout recipients.

Why is there not a ban on lobbying of the US Government by bailout recipients, or for that matter, candidates?

Mar 15 01:09 PM

[LBX:]

"Treasury: Still Going Nowhere"

This headline is misleading.

The treasury is being emptied pretty good by the Administration.

As fast as the US can borrow, and as fast as the money can be ladled out to the bailout recipients.

Why is there not a ban on lobbying of the US Government by bailout recipients, or for that matter, candidates?

Mar 15 01:09 PM

[367851:]

Well, the only way out of this mess is to take a page from our military's handbook and hire private contractors for the job. Nobody wants to clean toilets and peel potatoes, so KBR will do it for a price. The Treasury could put the job out for tenders and maybe they could get a stink bid from somebody with talent.

Mar 15 01:36 PM

[367851:]

This is really quite a weekend. Bernie Madoff forgot to pack his pyjamas when he headed off to court the other morning, the Chinese are drilling for oil in Cuba, and nobody wants to work at Treasury.

Mar 15 01:46 PM

[aarc:]

Samwise is correct: We are long gone past the Financial Crisis and the Credit Crunch. We are now deep into the Economic Crisis with spiraling layoffs and what nots.

Worse is that it seems like we are also starting to see the initial signs of a Political Crisis.

We are still without a LEADER at this stage. Obama has not even hit the road yet so to speak. He is still trying to hit the road with lots of IFFY conditions. No roadmap, no starting point, no nothing except the $787B stimulus (or not) package that was expected long before it was conceived. No Economic Recovery Program.

Mark to Market suspension and Uptick Rule re-instatement may or may not be able to stop the downward trend in the marketplace. But there is no credible leadership nor any government program that is capable of arresting the now seventh month of unrelenting sell-off in the stock markets and the resultant spiraling layoffs with of the last 3 months with no end in sight but kneejert oversold bounces.

Seven months of sustained sell-off. Anybody notice this? What will be the negative consequences in the months or years/decades ahead with a dis-United States of America?

Something constructive has to be done before the simmering clouds of civil unrests that is now plaguing Europe starts hovering over that of American soil.

Mar 15 03:55 PM

[aarc:]

Six (6) QUARTERs of unrelenting sell-off.

Look at the chart using BigCharts using quarters and all history of $INDU. Choose candlestick price display for more emphasis.

Look if there is any part of available history from BigCharts six (I mean BIG BIG 6) consecutive quarters of red-hot SELL-OFFs.

And America seems to be still in the talk-show business rather than action-oriented business.

Talk our way out of this darn hell hole?

Mar 15 04:09 PM

[aarc:]

Additional:

Look at the volume at the lower portion of $INDU chart. Lots of volume from year 2000 to present.

Massive stock market participation by the US citizens and other countries who tried to invest in the (dis)United States of America.

Multiple the volume with the price. Massive amounts of money gained and lost in a very short period of time. Perhaps more money than has been gained throughout the entire history of Dow Jones.

We need ACTION as of right NOW!

Mar 15 04:26 PM

[dixie:]

This all adds up to the Amateur Show in D.C.

Neither Obama nor Geithner are effective captains of the ship. Both appear directionless and as fish out of water.

Weak leadership begets chaos.

Mar 15 05:00 PM

[CaptainJJack:]

Outside of this column, I haven't read anything about this latest withdrawal. It isn't in any of the MSM websites.

I am guessing that this should be big enough news that someone besides George Stephanopoulos and Felix Salmon would mention it.

Mar 15 05:31 PM

[bcncv:]

What worries me most is that the truly competent people are watching the Treasuries actions and are refusing to jeopardize their career to be a part of it.

I don't know that this is the case, but it is starting to suspiciously look like it. Those that are smart enough to run the thing are smart enough not to want to.

Mar 15 05:35 PM

[true-lie:]

has anyone investigated the true net worths of all the new regimes appointees ? I would suspect that the media
would NOT have the Balls to do this. How and when did they
acquire their millions of dollars up front, then have their egos stroked to become part of the administration.
Gentlemen- unless we have the answers to the aforementiond, we are doomed. Please respond thanks

Mar 15 06:08 PM

[Harry Tuttle:]

What do they expect?

Maybe they can appoint Greenspan to be Secretary of the Treasury. He work with Geithner at the Fed and was appointed by Clinton. I also think he has excellent rapport with Summers and that other fellow Bob Rubin, the one from Citibank.

"change"

Mar 15 06:37 PM

[mr freddo:]

Mr Freddo is happy to serve as undersecretary of the treasury if needed. This fellow Geithner seems like a good chap so I don't mind giving this job a whirl.

The job doesn't sound too challenging. Just dig in and solve the greatest financial crisis in the history of the planet Earth.

Here is what I would do:

1. Cut off AIG. Let them go broke. That way when they pay out their obligated bonus checks, they will all bounce.

2. Stop taking calls from Goldman, JP Morgan, BofA, and Citi, and Morgan Stanley. If they bought CDS from AIG, well too bad. That was the bet you made fellas and it didn't work out. If you have to go bankrupt, at least it won't be with taxpayer money.

3. Stop throwing good money after bad. The financial system has succeeded in killing itself off with derivatives. Good by.

4. Start building the new financial system with a trillion of fresh capital to be deployed to set up 100 glass steagall type boring banks that loan money to businesses that have a growth plan that includes significant domestic employment. Each bank would start with 10 billion in capital and would be owned by taxpayers until a later date when the taxpayer equity would be sold at a profit.

Right now Geithner is looking bad because he knows that the US has embarked down a path that can only lead to losing trillions and having nothing to show for it except a lot of rich, bailed out bankers and insurance executives.

It is time to bite the bullet and let the system crash and burn to the ground. Let's start working on the new system.

Mar 15 09:07 PM

[11togo:]

I always thought that John Bogle, retired founder of the Vanguard Group would have made terrific Treasury Secretary.
Highly respected, with a deep knowledge of all things finance. If ever this country needed EXPERIENCE, this is the time.

Mar 15 11:06 PM

[Amitabha Mu...:]

Is there good company in America now that has got plenty of money to invest. I am of course not asking the government. Because it will mess up the project before it actually starts. The project will be to build a big city in the middle of desert like Las Vegas since then the price of the land will be dart cheap. It can start with building an international airport and a private university, at least ten engineering and management colleges and then a big cluster of modern hospitals and hotels. Higher education is an area where America still enjoys leadership position. Then there will be superways, power plants, supermarkets , mass transportation systems etc. I only wish if I had some money to kickstart such a project. Many of America's present day problems would vanish.

Mar 16 03:22 AM

[Doc 224899:]

Yellowhoard may have stumbled upon the key organizing concept during his rant: "intentionally driving us into the ditch".

Could it be the case that the Obama administration is approaching its economic decision-making with the first priority of campaign advantage, and trying to drive the entire nation down so hard and so fast that by the 2010 elections (or the 2012 elections at the latest) the worst part will be over and Obama and the other Democrats can take credit for whatever recovery the nation has been able to put together?

They could be counting on Americans to have short memories, and on the media to create a favorable spin, and this approach has worked in the past.


On Mar 14 03:12 PM yellowhoard wrote: > It is as though they are intentionally driving us into the ditch!

Mar 16 10:31 AM

[yellowhoard:]

You're making this too complicated.

The more the economy collapses, the more power the party in power assumes.

Mar 16 03:57 PM