Sunday, April 18, 2010

Geithner Calls Himself a "Catastrophic Failure"

Treasury Secretary Tim Geithner spoke on Meet the Press. In trying to sell financial reform, Geithner impugned his reputation.

In this financial crisis you saw a range of terrible things happen. Catastrophic failures in judgment by people running these institutions.

Catastrophic failures in basic protections governments have to provide, and the consequences were devastating.

Geithner was head of the New York Fed, charged with providing basic protection. Most Wall Street firms are run by the same people who committed catastrophic failures in judgment, Goldman Sachs-Lloyd Blankfein & JP Morgan-Jamie Dimon,.

One thing Wall Street can do is sell. They packaged junk, while laughing in their vaults. Tim Geithner belonged to "the club." Surely, they can pair up to market "serious financial reform", while maintaining greed with a tad less leverage, temporarily.

The SEC lawsuit against Goldman Sachs appears to be part of the choreographed "Kabuki Dance." Expect more threats of jobs moving offshore from the big money boys and claims of "sharp toothed" regulations from Dodd & his Brothers in Blue.

As private equity underwriters (PEU's) have been around since the 80's, why does anyone need six months to "define it"? How is a study of PEU "self regulation" anything but a gumming?

At least I got a chuckle from "smirking Tim's" cocky, self deprecation. Regret is something PEU's don't disclose, at least not The Carlyle Group's David Rubenstein.

As for Geithner's promise to constrain greed, that's hard to do when PEU's have a free pass. Carlyle's 30% annual returns remain the stated target. Surely, that will drive risky behavior. I've yet to hear anyone address this gaping hole.