Geithner's Outburst Was Misdirected; Read the Riot Act to Bankers Instead

So Timothy Geithner went ballistic and started throwing around some obscenities during a meeting at the Treasury over the slow pace of financial regulatory reform.

Well, good for him. It’s about time someone in the Obama administration got a little red in the face over the financial crisis.

But here’s the thing: the Treasury Secretary’s temper tantrum was misdirected and he ended up taking his anger out on the wrong parties. The people Geithner really needs to be delivering a few choice words to are the nation’s bankers — especially the ones who were bailed out by U.S. taxpayers and now act as if last fall never happened.

What’s really needed now is for Geithner to get in the face of big bank honchos like JPMorgan Chase’s (JPM) Jamie Dimon and Bank of America’s (BAC) Ken Lewis and tell them to start moving on mortgage modifications, in order to keep people in their homes and stop the wave of foreclosures.

He needs to read the riot act to Goldman Sachs’ (GS) Lloyd Blankfein and tell him the government didn’t save his firm so it could go back to running the biggest hedge fund in the world.

And Geithner should muster up the necessary vitriol to tell Citigroup’s (C) Vikram Pandit it’s time for him to pack his bags and leave town. Pandit’s decision to move back into risky proprietary trading is an indication that Citi, aka The Bank of the United States, will never change its ways under its current leadership.

Now I’ve got no problem with Geithner losing his cool with Mary Schapiro in the room, as The Wall Street Journal and Reuters reported he did. (Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp Chairman Sheila Bair also attended the meeting.)

The verdict is still out on whether Schapiro has the stomach to shake the lethargy out of the Securities and Exchange Commission, given her uneven track record at the Financial Industry Regulatory Authority and its predecessor regulator, NASD.

Bernanke, despite bearing a lot of the blame for getting us into the crisis, has performed rather admirably since the collapse of Lehman Brothers. It’s fair to say that the steps taken by Bernanke to pump liquidity into the financial system have done more to stabilize the economy than anything the Obama administration has done.

And Bair is the only regulator — maybe the only public official in Washington — who seems to be thinking outside the box these days when it comes to overhauling the financial system. Her call for some sort of special tax on too-big-to-fail banks may be the best way to rein in unbridled risk taking at Wall Street firms like Goldman.

So, by all means, get mad, Tim Geithner. But next time please sink your teeth into the people responsible for getting us into this mess and who remain as unapologetic as ever for their actions.

Comments

[newfietom:]

So glad to see other comments saying what I was thinking. Get your facts straight before you demonize the banks who were FORCED to take TARP and who have paid it back WITH INTEREST as fast as they could. They're taking the heat for a lot of what the Fed and Treasury permitted with bad polict and deregulation. As someone else said, post your BS somewhere else where less-knowledgeable people will believe your line.

Aug 05 09:19 AM

[chap08:]

The idea that you control an industry by telling them what to do is absurd. Do you think that you can take a failed industry, bring it back from the dead and by telling them what to do they will do things "right"?

Too big to fail is too big. Re-implement Glass Stegall, regulate the deposit takers and let the free market do the rest. Let those that fail, fail.

Aug 05 09:20 AM

[Clarence th...:]

To the Tune of "Yankee Doodle Dandy":

Brilliant Timmy needs a job
When this whole thing is o-ver,
So Tough-Guy Timmy picked a girl
On whom his rage to smol-der.

Pick a fight that's more your size -
Pandit looks much bold-er.
Ask your boss his 'jones to spare
And for the brass to shoul-der.

Aug 05 09:21 AM

[j-dub:]

I would never raise my voice to my bosses..................

Aug 05 09:26 AM

[Allan Frain:]

If Bush or Obama wanted the "riot act" to be read to the banksters neither Hank Paulson nor Tim Geithner respectively would have been put atop Treasury. Won't happen in this Administration. Would not have happenned under McCain, either. Now in a Ron Paul Administration...

Aug 05 09:30 AM

[RATHER FISH:]

RE: Modifications, after 5 weeks of paper shuffleing. the appraisel came back 25% less than assestment for ALL homes in the area
then might has well said "No" right off the bat... ( just make more busy work for the banks). Checked appraisels with other outfits, they laughed. So much for loan modications to help J Q PUBLIC.

Aug 05 09:31 AM

[john s. gordon:]

matthew you got it right/
> jack

Aug 05 09:33 AM

[nova:]

The author wrote: "The people Geithner really needs to be delivering a few choice words to are the nation’s bankers."

How in world can he do it? Cursing his own employers?
The author either too naive or just too dishonest and hypocritical.

Aug 05 10:22 AM

[daphne does...:]

'keep people in their homes.' trouble is, these never were their homes. they put no money down. they've saved nothing for their kids to go to college. granite countertops were more important than retirement savings. when you modify their mortgages, statistically, they fall behind again within a year. the right to own a home is not in the Bill of Rights.

it's all more bank bail-out. the banks run this country, and catering to their needs by government caused the mess we're in. now they are spared suffering for their greedy risk-taking.

it's disgusting how apathetic the American public is. fed pablum by TV, they will digest anything. i guess we have the government we deserve. Geithner and Summers and Bernanke are all big parts of the problem.

Aug 05 10:50 AM

[update:]

When you have a hard Chicago thug in the white house, this stuff happens.

Aug 05 10:59 AM

[Gregman2:]

"Geithner really needs to be delivering a few choice words to are the nation’s bankers — especially the ones who were bailed out by U.S. taxpayers and now act as if last fall never happened." Excellent point and well said.

Aug 05 11:03 AM

[update:]

People are confusing the big banks with the blood thirsty vampire holding companies. Yes the Goldmans and JP morgans of the world deserve to fail immediately, like today, unless they can pay back all the hidden graft and special deals of the bailout which was designed to benefit them illegally.

The real banks themselves however were victims of Barney Frank, Chris Dodd, Charles Schumer and Congress to a large degree. The democrats traded toxic loans for votes for a number of years.

Many banks were then forced by Paulson, republican, of Goldman Sachs (weeks after receiving his $500 million golden parachute) to participate in the TARP against their will to protect a couple of large banks, and illegally a bunch of fantasy holding banks.

So yeah tax cheat Timmy is of course cursing at the wrong people, but in reality it is up to the American people to remove these clowns in our government from both failed political parties.

Aug 05 11:13 AM

[Buckoux:]

"Timmy" wouldn't dare yell at Goldman Sachs, that bank's the O.J. Simpson of Wall Street.

Aug 05 11:18 AM

[Big Bubbette:]

I understand there are those in government now arguing that the Glass-Steagall Act cannot be re-enacted as these banks are now too big to separate. Where's Curly when we need him. Look at the Grouse...

Aug 05 11:29 AM

[commoinsens...:]

liberal crap? Geitner and the fed are promoting financial socialism and you call this liberal crap? is the "investment community" going to bail out golman, citi et al when the f up the next time?


On Aug 05 06:55 AM eagle01240 wrote:

> Start posting this liberal crap on political sites rather than investor
> ones. Your analysis would doom this economy and banking system quickly.

Aug 05 12:36 PM

[commoinsens...:]

oh please, these banks that are paying back tarp are still holding millions if not billions of bad debt that they've hiddne under revised fasb rules. how can you possibly defend any of these criminals?


On Aug 05 09:19 AM newfietom wrote:

> So glad to see other comments saying what I was thinking. Get your
> facts straight before you demonize the banks who were FORCED to take
> TARP and who have paid it back WITH INTEREST as fast as they could.
> They're taking the heat for a lot of what the Fed and Treasury permitted
> with bad polict and deregulation. As someone else said, post your
> BS somewhere else where less-knowledgeable people will believe your
> line.

Aug 05 12:39 PM

[Tony Daltorio:]

The author is generally correct - the greedy Wall Street banksters are to blame for much of the economic mess we are in.

I don't blame Congress, just like I don't blame Timmy Geithner. They are only following orders from their Wall Street masters who have bought and paid for both political parties.

Aug 05 02:51 PM

[WhoisJohnGalt:]

He's the Treasury Secretary on behalf of the banks, of course he won't lift a finger against them. In terms of his brutish display, losing his cool only demonstrates further that he knows he is not getting the job done.

Aug 05 03:41 PM

[woodsey:]

I say it's congress period. But congress is the reflection of the people, gol durn it. If it's sailor talk that's needed I'm the guy for the job. Maybe I'm too freakin old.

Aug 06 11:12 AM

[Moon Kil Woong:]

Geithner could start by putting his own house in order by delivering his choice words to none other than Paulson, the former Treasurer and squanderer of America's money and his billion dollar CDS shorting hedge fund.

After that well, he could swear at just about anyone and be justified. Unfortunately, that includes himself for coming up with insane ideas about giving more federal powers to an non-governmental agency (the Federal Reserve) which can't even manage interest rates let alone anything else of significance.

Aug 06 01:16 PM