Why Won't Geithner Commit to No More Bailouts?

Given the reputed strong earnings of Goldman & Other US Financial Firms, why won’t secretary Geithner commit to no more bailouts?

Below is a partial transcript of the above video:

Congressman Brad Sherman: “Today, derivatives are being sold. And the buyers of the derivatives are looking at their counterparty and they’re saying, ‘well there may not be enough capital there’. But one additional source of capital – is there maybe more bailout?’ Can you correct that misconception and make a clear statement now that derivatives that are sold today are not going to be the subject of bailouts for either the issuer or the purchaser?”

US Treasury Secretary Timothy Geithner, in response, uses a common technique called block and bridge in which he provides an answer that has nothing to do with Sherman’s question. Sherman, clearly annoyed by Geithner’s clever avoidance of his question, responds:

“Mr. Secretary, I’m not asking for philosophy here…I’m asking a very simple statement. Is it at least theoretically possible that a derivative issued today will be subject to a bailout tomorrow.”

Geithner, not once, but twice more, uses block and bridge techniques to continue to avoid Sherman’s question.

Sherman replies: “Mr. Secretary, I can understand while you prefer to answer somebody else’s question…I want a yes or no answer.”

Giethner, backed into a corner, incredulously states, “No I’m not going to answer that way because what you’re asking me to do is to give an irresponsible answer…”

Thus, US Treasury Secretary Timothy Geithner essentially argues that he believes it is irresponsible of him to guarantee that US banks will not receive more US taxpayer money to bail them out if they choose to sell the same junk, worthless derivative products that they sold by the billions to unsuspecting consumers in the past.

This, despite supposed record earnings that will be released by Goldman Sachs (GS) today and rumblings of record bonuses that will be paid to Goldman Sachs employees, essentially made possible with US taxpayer money. This, despite AIG paying bonuses of more than $1 million to each of 73 employees just several months ago, bonuses that were essentially funded again with US taxpayer money.

In the next video, Paul Craig Roberts, former Assistant Secretary of the Treasury under President Reagan, sheds some light regarding how US Secretary of the Treasury Timothy Geithner categorizes actions as irresponsible versus responsible:

At 2:49 in the above video, Max Keiser asks Mr. Roberts, “Does the US Treasury Secretary work for the people or does he work for the banking system on Wall Street?”

Paul Craig Roberts: “He works for Goldman Sachs.”

Though I believe Mr. Roberts’s reply is incomplete because Goldman Sachs is only one of the few entities and families that Timothy Geithner works for. In the end, I believe that any US bank that reports strong earnings this earnings season (including Goldman Sachs) will be taking advantage of the numerous changes in accounting rules and regulations and the capital infusions granted them via TARP (US taxpayer) money to creatively manufacture “surprise” earnings so they may pay themselves large bonuses despite the lack of any fundamental strength. So in the end, it would not surprise me one bit if the big US banks needed another round of bailout money and Mr. Geithner seeks that money from the pockets of US taxpayers.

Comments

[ari5000:]

Geithner has not been cleared by $GS to set policy. C'mon.

Jul 14 11:05 AM

[Joseph L. S...:]

“Why Won't Geithner Commit to No More Bailouts?”

…Possibly because, today, Robin Hood is really the Sheriff of Nottingham, robbing from the poor, and giving to the rich. Only in this case, the net is cast wider. Now it is robbing from the poor, the middle class, and the small businessman who, after 20 years of paying himself minimum wage, is now guilty of the sin of finally being borderline well-off.

This is done allegedly for the protection of the many but in fact the money flows from every taxpayer’s pockets to the IRS, where Treasury chief and Goldman protégé Tim Geithner works in the Corporate Welfare Division, Wall Street Region. In privatizing taxpayers’ money to his favored cronies, he has had no equal.

He has peers, however -- like former Treasury boss Hank Paulson (Goldman insider), Robert Rubin (Goldman insider), Mark Patterson, Treasury’s Chief of Staff (Goldman insider), John Thain (Goldman insider), Robert Steel (the head of Wachovia, for whom the Wells Fargo shotgun marriage was arranged, and Goldman insider), Neel Kashkari, the guy in charge of the bailout guy who gives your tax dollars to Wall Street (Goldman insider), and the irreplaceable Ed Liddy (Goldman insider), whom Paulson hand-picked to make sure that when AIG got taxpayers’ money, it would be quickly privatized by paying 100% to Goldman. $12 billion worth – coincidentally, the amount Goldman has placed in their bonus pool, with most of that going to a few high-level executives, this year.

Sheriff, if this is the direction hope and change is taking us, how come it looks so much like business as usual?

Jul 14 02:06 PM

[Hephasteus:]

Billing the US taxpayer and collecting are two entirely different things.

Aug 14 07:03 PM

[ilovesum:]

Ironically , the govt needs to step up and take care of this.
The FED , Secretary Treasurer , SEC and the banks are in cahoots together.
After all this fraud ie Paulson threatening Ken Lewis , Bernake telling him to . The SEC taking away the uptick rule , the SEC allowing naked shorting, SEC not even examining ONE, yes thats ONE trade of Madoff's ,no one has been arrested or jailed. White collar crime seems to pay well.
Guys like Alan Grayson and Ron Paul need to step up.

Sep 12 10:24 AM

[Chiropracto...:]

They are all in banana Bens bed together. It really is nothing more then a ploy to steal from the poor and give to the rich. We need more Government intervention. HA HA

Dec 20 10:31 AM