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Reich to Obama – Re: Geithner

Posted by Larry Doyle on March 16, 2009 8:44 AM |

Cross Posted from No Quarter!! Thanks!
Major h/t Andy!!

Since this pretty much speaks for itself, I’m just going to step out of the way.

From Robert Reich’s Blog:

(Robert Reich was the nation’s 22nd Secretary of Labor and is a professor at the University of California at Berkeley. His latest book is “Supercapitalism.” This is his personal journal.)

FRIDAY, MARCH 13, 2009
Paul Volcker to Barack Obama

Former Fed Chair Paul Volcker is briefing President Obama today on how well the stimulus package is doing. I have no inside knowledge of what he’s saying, but if I were Volcker (and I’m not — he’s almost two feet taller than I am), I’d say the following:

Mr. President, it’s way too early to know exactly what the stimulus is doing because the money is barely out the door, but I’ve got to tell you I’m worried as hell. Unemployment is at 8 percent, and underemployment is over 14 percent of the workforce. The economy is shrinking much faster than it was when you put the stimulus together. It will be more than a trillion dollars short of its full capacity this year, and I have every reason to believe the same next. State governments alone are hundreds of billions in the hole, creating a huge drag. So your $787 billion over two years, only two-thirds of which is direct spending, isn’t going to get us nearly far enough. I’d strongly recommend you make ready a second stimulus, about the same size, and get it enacted as soon as possible, with the proviso that it will be implemented if and when unemplyment hits 8.5 percent or underemployment reaches 15 percent.

Oh, and by the way, Mr. President. You may not want to hear this, but your Treasury Secretary is making things worse. His dithering on what to do about Wall Street, and his incapacity to speak clearly to the Street and to the public about what needs to be done, is spooking everyone. Why doesn’t he just put the irrevocably insolvent banks into receivership under the FDIC, sell off their assets, protect depositors, and reimburse taxpayers with whatever remains? Let the rest of the banks fend for themselves — working out their bad loans with their creditors. As to AIG, well, that’s a complete basketcase. Put it out of its suffering. Take it over, sell its assets, protect policy holders (you’ll need to create a big co-insurance plan with every other major insurer in the world), then get out.

Want a cigar?

I don’t smoke, but a cigar and a health shot of tequila is sounding good about now. And it couldn’t make the sick feeling in the pit of my stomach any worse.

  • fiscalliberal

    I really wonder if Reich has any influence anywhere.

  • Mountainaires

    Why doesn’t he [Geithner] just put the irrevocably insolvent banks into receivership under the FDIC, sell off their assets, protect depositors, and reimburse taxpayers with whatever remains? Let the rest of the banks fend for themselves — working out their bad loans with their creditors. As to AIG, well, that’s a complete basketcase. Put it out of its suffering. Take it over, sell its assets, protect policy holders (you’ll need to create a big co-insurance plan with every other major insurer in the world), then get out.

    Well, that’s a very good question. Why, indeed? Why doesn’t Geithner do that? They’re hoping for a miracle, and stalling for time, I guess. Bernanke is so desperate to continue throwing good money after bad, at the banksters. When you don’t know why, with so many people recommending another course, the catastrophic possibilities loom larger. It must be so much worse than they’re admitting.

    Either that, or Obama, Geithner, Summers and Bernanke really are Wall Street’s “made men.”

    The arrogance of some of these people is just galling.

    Bank of America, Citi, AIG, Moody’s…

    Moodys Rating Service: Anyone who believed our “Puffery” is an Idiot

    http://georgewashington2.blogspot.com/

    http://www.bloomberg.com/apps/news?pid=20601039&sid=aQzRB3sWOivE&refer=columnist_weil#

    • Larry Doyle

      Thanks for that link. It is not a difficult case to make that the rating agencies perpetrated a fraud themselves and played a large role in perpetrating a greater fraud upon investors.

      Will our legal system have the integrity to pursue the case?

  • Larry Doyle

    I do not think so. I view an overture like this to be an attempt to remain relevant and take a shot in the process.

    While Obama has obviously embraced former members of the Clinton administration, I have neither seen nor heard much from Reich. His statemen that “minorities” should receive preferential treatment in the awarding of government contracts did not get a lot of air time. Obama may hold similar feelings but they are not going to get a lot of positive press.

    Reich has gone from Cambridge to Washington and now to Berkeley. Not a lot of real world experience in those environs!!

  • fiscalliberal

    From Larry: Will our legal system have the integrity to pursue the case?
    ———————————————————
    Barney Frank to hold hearing March 20th. From the house hearing website: http://www.house.gov/apps/list/hearing/financialsvcs_dem/press0320093.shtml

    Washington, DC – House Financial Services Committee Chairman Barney Frank (D-MA) today announced the committee will hold a full committee hearing entitled “Federal and State Enforcement of Financial Consumer and Investor Protection Laws”” on Friday, March 20, 2009 at 10:00 a.m. in 2128 Rayburn House Office Building.

    Chairman Frank recently announced he is holding several hearings in March to continue the Committee’s work on financial reform. The March 20th hearing will look at whether federal and state law enforcement agencies have all the tools and resources they need to aggressively pursue financial institutions and individuals that commit fraud, abuse their positions and violate the law.

    In a recent press conference, Rep. Frank said, “Perhaps most importantly, the American public has the right to know what enforcement actions are contemplated against those irresponsible and, in some cases, criminal actions that lead to the current situation.” Frank continued, “Preventing a reoccurrence is very important. One way to do that is to put in new rules–rules that are unenforced are of no value, so an equally important part is to pass rules that are enforced,”

    ——————————————————

    From his press conference he said that they are pulling in Federal and State Attourney Generals – we shall see.

  • Larry Doyle

    We shall see. Will this be grandstanding, real legislative and judicial pursuit, politics, or a combinaton of all of the above.

    There is certainly no lack of material and cases to prosecute.

    If ever there was a chance for bipartisan initiatives, this would be it.

    Thanks for the link.

  • Andy

    LD: I emailed you to senseoncents@aol.com also a post by Reich about “Obamanomics” and would love to have your take on what he writes. Frankly I was dismayed Reich thinks that their plan is in any way “conservative” …

    O/T: I was again today at my local branch of BoA and the person that I usually speak with there told me that BoA has paid part of the TARP back already. That’s what they know (internally?) from Ken Lewis.
    I hadn’t heard this before. Have you? Is it so?

    Thanks!

  • Larry Doyle

    I will review the Reich piece and comment.

    I have not heard that news about BofA. I would be surprised because from what I understood if banks paid back TARP money early there would be penalties involved. I know that JPM has given word that they will pay it back as early as they can without incurring penalties. I wonder if BofA is taking the same approach. If they had already paid it back I am sure that would be front page news on every media outlet.






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