Treasury’s Herb Allison Needs a Truth Enema
Posted by Larry Doyle on March 4, 2010 12:33 PM |
According to testimony this morning from Treasury official Herb Allison, currently charged with overseeing the management of the TARP, there are no financial firms now guaranteed as ‘too big to fail.’
What rock did Herb just crawl out from?
The Wall Street Journal addresses Herb’s ridiculous comment in writing, Treasury Official: ‘No Too Big to Fail Guarantee’ for Big Financial Firms:
There is no U.S. government guarantee to protect the largest financial firms, a Treasury Department official said Thursday, as a congressional watchdog criticized the $45 billion in government aid provided to Citigroup Inc.
Herbert Allison, who oversees the Treasury’s $700 billion financial rescue plan, disagreed with members of a congressional oversight panel that some financial firms benefit from the assumption that the government would step in to prevent their failure.
“There is no too big to fail guarantee on the part of the U.S. government,” Mr. Allison said.
How often did we hear similar drivel about Freddie Mac and Fannie Mae?
What happens to people when they get inside the Beltway? Do they instinctively become serial panderers, if not outright liars?
Elizabeth Warren, who chairs the five-member Congressional Oversight Panel, said it was clear that financial markets do assume the guarantee exists, pointing to a recent ratings agency report that specifically noted the government’s role in backing Citigroup.
“The market clearly perceives that there is a too big to fail guarantee,” Ms. Warren said. “That gives Citi an advantage in raising capital. … That is very valuable to Citi.”
Panel members locked horns with Mr. Allison over his reluctance to answer some questions, primarily regarding the health of Citigroup when the government injected capital into the bank in late 2008. Panel member Damon Silvers, pressing Mr. Allison on whether the bank was at risk of failure at the height of the financial crisis, said it was “extraordinary that it is not possible to have a straightforward conversation.”
The fact that America can not get straightforward and honest answers from our government officials plays right into my commentary the other day, Harry Markopolos: “Don’t Trust Your Government”.
Bend over, Herb.