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  • Morning Bell: Wall Street Bailouts Forever

    There is no person more central to Washington’s bailouts of Wall Street than Treasury Secretary Timothy Geithner. As President of the Federal Reserve Bank of New York, he oversaw the federal bailout of Bear Stearns and under former Treasury Secretary Hank Paulson, Getihner designed the original bailout plan for the American International Group (AIG). As Treasury Secretary, Geithner has enthusiastically assumed full authority over the $700 billion TARP fund first secured by Paulson under President Bush and he has continued to wield it in the same haphazard manner as his predecessor.

    Considering these facts, one might think that the Obama administration would be shy about making the personification of Washington’s Wall Street bailouts the front man for their supposed financial reforms. But no, Secretary Geithner took to the op-ed pages of The Washington Post yesterday to make the case for the President’s version of finance reform. After a brief defense of his TARP management, Secretary Geithner writes:

    As the Senate bill moves to the floor, we must all fight loopholes that would weaken it and push to make sure the government has real authority to help end the problem of “too big to fail.”

    Crucially, if a major firm does mismanage itself into failure, the Senate bill gives the government the authority to wind down the firm with no exposure to the taxpayer. No more bailouts. Instead, we will have a bankruptcy-like regime where equityholders will be wiped out and the assets will be sold.

    But does the Senate bill’s “bankruptcy-like regime” solve the “too big to fail” problem? No. In fact it makes it worse. What the Dodd bill actually does is create a new $50 billion fund to be used in “emergencies” for restructuring firms deemed too close to bankruptcy. And who gets to decide when there is an emergency and which firms are too close to bankruptcy?  You guessed it: Treasury Secretary Timothy Geithner. The Dodd bill is thus nothing but a permanent extension of Secretary Geithner’s TARP powers.

    But not only does the Obama administration’s finance plan further empower the exact same bureaucrats who failed to prevent the last crisis, it also makes it more likely that those same institutions that made risky bad bets before will make the exact same mistakes again. MIT professor and 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown author Simon Johnson explains how promised government bailouts increase the moral hazard that leads to “too big to fail” policies: “Creditors had only limited incentives to watch over major banks. Ordinarily, creditors should demand high interest rates on loans to highly leveraged institutions. However, the expectation that large banks would not be allowed to fail made creditors more willing to lend to them.” By establishing a permanent Geithner-controlled “emergency” fund, Wall Street creditors will know they never have to watch over their counterparts: if things go bad, their buddy Geithner will have their backs.

    Responding to conservative arguments that their finance reform plan encourages, not discourages, future bailouts, White House blogger Jen Psaki wrote yesterday: “The reality is that there’s a clear choice in this debate: to stand with American families or stand on the side of the big Wall Street banks and their lobbyists who are defending the status quo.” Problem is, it is “the big Wall Street banks” that are supporting the Geithner permanent bailout plan. In their annual letter, current Goldman Sach’s CEO Lloyd Blankfein and President Gary Cohn make the case for more Washington regulation. And as The Washington Examiner’s Tim Carney documents, Obama raised about a million dollars from Goldman Sachs employees and executives in 2008, the most any politician has raised from a single company since McCain-Feingold. And the Obama administration employs many Goldman alumni/lobbyists including Chief of Staff Rahm Emanuel, White House economic advisor Larry Summers, and Treasury Chief of Staff Mark Patterson. So who is really on the side of the American people and who really is doing the work of Wall Street lobbyists?

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    40 Responses to Morning Bell: Wall Street Bailouts Forever

    1. Richard Cancemi says:

      Corruption, corruption and more and more corruption, that's all we get with Obama and his gang. The stench is nauseating!

    2. Paul Schwab Centervi says:

      To: Tim Geithner, Knock it off now. Enough of our money going to bail out firms that should have been allowed to go out of business, prior to this crazy idea of yours. Pretty soon the Government in Washington will own us all and we won't stand a chance of living our own lives in peace. Remember Faith, Hope and Charity.

      Maybe we should all read the Constiution and Bill of Rights, and moreso read about our Founding Fathers, who sweat blood to establish our Republic.

      God help us all if you guys in Washingon keep doing what you are doing.

    3. Dennis Social Circle says:

      This is just more "guvment" in the truest form. I believe if one will look to our south one will see much the same thing happened in Venezula. Chavez probly started much the same way obama and the dems have, now he controlls the whole country, including the media. Of course the media is already under obama controll, they will push the socialist agenda till the cows come home and then say they did not know.

      I am sick of the way this country is going, the American people hyave been lead like a bunch of sheep to the slaughter, and yet refuse to see where this country is headed. We must regain controll of this country, and it must be done this year. American will soon be past the stage of no return, the way of life that made America great will be gone. The people of this country need to stand up, show some pride in ourselves, in our jobs, in our way of life, and then bend our backs and get the job done that needs doing. The workers of this country are in the minority, America has become a welfare state. Society has lived in the lap of luxury for way to long, people have become lazy in their ways. Society has become one of what is in it for me, not one of what will make this country great and our way of life strong and solid.

      WE MUST VOTE IN NOVEMBER BY GREAT WAVES, SHOW THE "GUVMENT" THAT IT EXISTS ONLY BECAUSE OF US THE WORKERS, NOT BECAUSE OF A GIVE AWAY PROGRAM USED TO BUY VOTES.

    4. Sandra Lea Schell, T says:

      No more bailouts! Let the big guys fall down and then let them get up by themselves all over again, just as the average American is required to do when he stubbs his toe and falls into the mud. It's called facing life on its own terms. "Things are tough all over," my grandpa used to say from time to time.

      Corporations are comprised of PERSONS, and those persons who make irresponsible and reckless decisions which drive their own businesses into extinction should be permitted the first-hand experience of realizing the consequences of their stupid decisions.

    5. Duncan Druhl says:

      HA HA HA…. I can see Lloyd Blankfein asking: "Please, please, please regulate me as the Dodd bill is written…." HA HA HA…. that is like a 1920's Speakeasy Association asking to be regulated by Al Capone and Joe Kennedy, Sr.

      I love living in the post-Orwellian world. At least it keeps my sense of humour going merely by listening to the politicians in Washington.

    6. Donna, MI says:

      I've asked for years, "What ever happened to laws regarding monopolies?" Since the headlines years ago with Ford and GM being forced to break up their ventures, we've hardly heard this term. So, how do companies get to big to fail?

    7. Lloyd Welch says:

      Obamas policy can and will be traceable back to the money. He feels that with enough money he can beat us.

    8. Norbert Stager says:

      When are the American People going to wake up? These instances are so blatant and borders on criminal. When are going to say enough is enough. When are we going to start boycotting the drive-by media that is failing to report the facts about what is going on? Hucksters like Pelosi and Reid are so blatant and smug. They need to be tried for their criminal behavior of knowingly bankrupting our country in these scams like Cap and Trade, Financial Reform and Obamacare.

    9. Ken Jarvis says:

      The HF Seldom mentions THE CRISIS IN HAITI

      BUTMichelle was there this week

      she wanted to Call Attention

      to the crisis

      now that the coverage is slowing down.

      Good Idea.

      Thank YOU, Michelle

      LVKen7@Gmail.com

      The BIGGEST Movement in NUKE 's

      happened when

      Obama lead the REST OF THE WORLD

      TO FEWER NUKES – AND MORE CONTROLS.

      Another GOOD Thing he is DOING.

      Thank YOU Mr. Prez.

    10. Charlotte O'Har says:

      Washington is so corrupt, blinded by its own arrogance, that it is impossible this Congress to clean up the mess that over the years, along with the help of apathy of American voters, has accumulated.

      It appears the only solution is to throw the bums out and keep throwing them out until our elected officials understand that the responsibility of running the country is their's, not the hired help (also know as bureaucrats).

      Charlotte O'Hara

    11. Dale, Chigago says:

      Risk takers should always and in all cases be allowed to fail. Heads of Wall Street firms protect their turfs if not their back sides, when they support regulation and government backing. Poor or corrupt management in charge of others funds should be prosecuted. NO NEW LAWS ARE NEEDED. Risk takers include the public.Caveat Emptor. These comments also apply to all commercial activity. People in homes they can't afford, should not be in them. Business law already exists to take care of these problems. Picking winners and losers is wrong. Politicans do this for votes. Idealogs infringe on others ideals. Small government, low taxes, and freedom is all that is needed.

    12. Brenda Cregor, CA. says:

      The "President's version of finance reform" is to destroy the free market and implement a more Socialist model.

      Why are we all surprised that he is delivering the "change" he promised?

      At least the man is "honest" in that degree…and I despise it.

    13. Don, Texas says:

      This situation has got to be to be the most absurd in history other than the one in Germany in the 1930's. Geithner knows better, but he's caught up in the "Hope and Change", and the immaturity and dangerious vision of a group of missfits that "take advantage of a crisis". There is nothing wrong with our systeem. The problem lies with our leadership in congress not taking responsibility for their actions. The only hope in Washington today is; hope to get out with benifits before someone finds out. We all know the definition of insanity. and what they are proposing now is more of the same. Bigger government. Only this time (and all the other times if you think about it) it's to controll the people in order to protect "their" own interest. Better known as CYA. What was that Bush said? "Wrong me once, shame on………..shame on……well, you know what I mean.

    14. Brad Kelley, Severna says:

      As yes, the world according to Bob Rubins, Gietner's mentor. He trained his boy well. Set up an industry where the fat cats can rake in the dough under high risk conditions and claim no responsibility for the results, as Rubins recently did for the Citigroup failure. Yet, they'll still have the protection of our tax dollars when they default again, and again, and again. When the fox guards the hen-house, the chickens are defenseless.

      It's our fault really, we are the one's ultimately responsible for those we put in office. And, we are responsible for allowing this to continue. Unfortunately, with all the new rules, we are reduced to mere letter writers and demonstrators.

      Ah, for the good old days when someone could challenge one of these bozos to a duel, take them over to Chevy Chase and just shoot em like Burr did Hamilton. Even though I do not think is the best way to get things done, it would certainly be more efficient.

    15. Al Wunsch, Fl says:

      The only entity too big to fail and assuredly going to do so (at the current rate) is the U.S.A. thanks to the big three – Pelosi,Reid, Obama. These dems do not know how to solve a problem other than to create an agency/committee and increase spending to cover it. I think the people are going to have to spell out to congress exactly what needs to be cut from the budget. We don't need depts of energy, education, the EPA is too big, government employment needs to be cut significantly etc. We need the Fair Tax and a sound energy policy that includes drilling for oil/gas and aggressively moving us off gasoline.

    16. Kenneth Kensington - says:

      More and more on the backs of us working stiffs, if we fail there will be a free fall for us all.

    17. Val.E., Texas says:

      Obama is who he is and will not change his spots. He just keeps getting worse, and even though his approval rating falls, he still gets more powerful because of all the private businesses, and the unions, that he has grabbed. Let's stop being scared of him and scared of what's going to happen, we know what is going to happen! More of the same!

      Obama has picked away at our liberties, inch by inch, and he is counting on us being sheep and not noticing our losses until it is too late for us to react. Already in our houses, and after immigration [he's currently working on this], he will go after the internet [already working on this, too] and then term limits. I have always known that he wants to be president for life.

      However, even more threatening is IRAN, Obama admits he can't handle them, big surprise, what can he handle? And no one is really focusing on Iran. I have heard the scientists say that when, and I say when, Iran gets their bomb exploded the fallout will get into the jet stream and kill us all.

      Obama must only be a one-time president. We have got to get a Reagan someone, if only, in the White House. It is imperative that we boost our defense immediately and properly control Iran, or bomb them, because they will not stop.

      We all know that Obama IS NOT A U.S. Citizen.

      Why are we not working on this? Dig out the people who got the payoffs, expose them, show him for the traitor he is. We know it is true, let's prove it and we can get rid of him, his crew, and reverse everything, as much as possible, that he has ever done against this country.

      While I am here, what is Scot Brown of Mass doing? I thought he was going to ride the straight and narrow highway of the platform on which he was elected? But it appears he has wandered off into Obama dreamland. Doesn't anyone in Washington have a backbone?

      Obama and his crew continue to act against our country and against our Constitution, and this is treason! We must get him out this November or we may never be able to remove him.

      We must act this year! It is positively critical!

      We can do it, so let's get it done.

    18. Blair, Franconia, NH says:

      Obama, I'll take the hope. You keep the change. Call me naive, but can't we just

      rob the Bank of Beijing?

    19. Leith Wood Richmond, says:

      Fascinating article, Thank you. With such fine, honest, upstanding gentlemen as Geithner, Dodd, Emanuel and Obama involved, you know Americans are sleeping better ! Keep it up you self-serving cheats. People like you never win in the end. The American public is gearing up to kick you out.

    20. Ben C. Ann Arbor, MI says:

      A Tea Party friend of mine hoped that the conservative movement is not an excercise in straightening the deck chairs on the Titanic as it sinks. I hope not too but given I just read that on an average school day 19 million kids depend on a free or reduced price lunch I am worried it is true. Our entitlement mindset includes the young who will grow up asking "where is my free lunch?" Self reliance will be a concept of the past and euro-socilaism will be here to stay. Someone please tell me this isn't going to happen.

    21. Gary, CA says:

      The problem as I see it is that the too many of the elites of all professions but especially the media and education believe that average people are just too stupid to manage their own lives. They can't be trusted to manage their own money and suffer the consequences of those decisions etc. which is simply amazing when the financial disaster that federal government policies over many years have produced is considered. Worse yet, the pressures that politicians have put upon businesses especially financial institutions have made it almost impossible for them to thrive. As a result, those big money interests are now seeking greater government involvement as protection from a combination of their own mistakes plus the consequences of prior government intrusions into their management decisions. This greater government involvement is changing the very nature of our society from one that emphasized individual initiative, freedom of association and individual responsibility to one that emphasizes centralized control. How far will this go? Where will it lead and where will it end?

    22. Richard Cancemi says:

      Ken Jarvus

      It is hard to believe you are a real living person. Do you realize how much of a toadie to Progressives you have allowed yourself to become? I cannot see how you swallow every gnat and camel thrown out by the socialist Progressives!

    23. Doug Whaley, Lake Ha says:

      What is the differance between Wall Street crooks and government crooks? None, the government crooks just moved to Washington from Wall Street. Invest in Canada, this country is toast.

    24. RennyG Maryland says:

      I keep reading, hearing, watching all this negative information comming from the right and reputable organizations, as to what is happening to our economy, our freedom and or liberties, why can't we go forward and "impeach" this community organizer??!! Is there a reason? We talk about voting to resolve this disasterous atmospher we have, well wake up people, the community organizer is using our money to buy votes to maintain his direction. Well, if we count on the voting process and we don't win, guess what, "we lost time and we are done!!!!" The community organizer is not worrying about the voting process, he will have that covered by then. Can the impeachment process be started. "THEY WOULD!!"

    25. Sil, Fulton NY says:

      Tim Geitner in charge of financial reform…..this should be in a cliche book next to "Pot calling the kettle black"….and for those of you who don't understand sarcasm….that was not a racist remark!

    26. Lin Hodges - Chesapeake, VA says:

      Back in Economics 101, we were taught that the federal government frowned on mergers and a business getting too big. Example: breakup of ATT&T. However, in recent years, merger after merger took place until I wondered if the U.S. would end up with one “huge corporation.”

      Any business considered by the government as “too big to fail,” should be required to breakup into two or more smaller manageable companies. I own a medium size business but would never expect the government to “bail me out” in case of my failure to run the business sensibly.

      The same is true of BIG federal government. Most of what our federal government does could be better managed by each state. Let the federal government take care of our military, homeland security, post office, etc, but give the states power to run the rest like health care, education, etc. Too many layers of employees doing the same job in Federal, State and Local governments is a recipe for failure.

    27. toledofan says:

      Wasn’t TARP the direct result of Congress, specifically the Banking Committee, forcing Fannie and Freddie to make home mortage loans affordable for everyone and wasn’t it these guys coupled with the Prewsident that said the auto companies and Wall St were too big to fail? Wasn’t it that same committee that ignored the signs or problems with variable mortage rates especially to lower income families. Isn’t this the same Congress that rammed a healthcare bill through coupled with a takeover of the student loan industry. Let me think, but, wasn’t this the Congress that increased the Federal spending and added 1.3 trillion dollars to the deficeit this year. So, now you’re telling me that this same Congress that was responsible for all the above stuff is going to be charged with fixing what they screwed up in the first place, only in America.

    28. john Arizona says:

      Is anyone really surprised at the Chicago style politics in the Obama White House? We were warned by the conservative media that he was a liberal activist who owed his whole being to the Chicago crooks, and now we wonder what happened? Apparently those folks who lean so far right they're tipping (attn: Ken Jarvis), still don't get it. What does it take for the lefties to wake up?

    29. Lee White Tanks AZ says:

      I hope someone is keeping score. This piece of legislative trash must be added to the list that so far consists of at least:

      1) This Financial Bailouts/TARP Forever legislative stinker.

      2) The Obama Care Bill

      and the soon to be

      3) Cap and Trade

      4) The financial regulative overhaul (Dodd's Dream)

      5) Immigration Reform

      6) 7)….

      These are the key legislative successes that Obama wants in place before the 2010 midterm elections. These are the key legislative bombs that must be "defused" and relegated to the scrapheap of bad law and worse legislation by the incoming conservative Congress.

      Repeal, repeal and repeal.

      PC is Thought Control

    30. SueD, Arizona says:

      The obvious relegation of American’s wishes, wants and concerns by deceiving and bribing members of the House and Senate to pass Health Care should have been a loud and clear message, but there are those Americans who believe in Obama, Reid and Pelosi and the dismantling and destruction of the our Constitution and our country. Knowing who you vote for, whether Democrat or Republican running for office in 2010, is essential to regain this country, its economy, education, military superiority and space exploration. It’s a big job and a big responsibility only Americans can do and need to do for our people and this great country, AMERICA.

    31. Billie says:

      Didn't the president accuse "wall street" as greedy? this man's qualification is hypocrisy, ignorance. All other negative words fits this administration. very unstable!

    32. SueD says:

      The obvious relegation of American’s wishes, wants and concerns by deceiving and bribing members of the House and Senate to pass Health Care should have been a loud and clear message, but there are those Americans who believe in Obama, Reid and Pelosi and the dismantling and destruction of the our Constitution and our country. Knowing who you vote for, whether Democrat or Republican running for office in 2010, is essential to regain this country, its economy, education, military superiority and space exploration. It’s a big job and a big responsibility only Americans can do and need to do for our people and this great country, AMERICA.

    33. DORIS MARTINA, DANSVILLE,N. Y. says:

      WHY CANNOT WE ALL JUST REPEAL OBAMA ET AL AND RETURN TO PEACE AND COMMON SENSE?

    34. Bill, Eastern PA says:

      We no longer live with a representative government. These people tell bold face lies and weaken our great country. We will need to get out an vote to dismantle this administrations power. I took an oath years ago to defend my country from enemies both foreign and domestic. I believe the leaders of the current administration fall into the later category. Everyone I talk to is dismayed at something these people have done. It is time to oust them from there seats of power with the power of our votes!

    35. Ruth, St. Helena Isl says:

      Everyone has a lot to say about what is happening and what they "WISH" could be done but no-one offers answers. In case you haven't noticed, this President is DANGEROUS to our welfare; financially, healthfully, morally and to our security. These people are paid by us through our taxes and we've already heard that they are going to be hiring 16,000 more IRA agents. WHY?? Because they realize that sooner or later we will GET IT and stop paying our taxes and they are going to need more people to FORCE us to do it. I maintain that the money in taxes that is deemed for the Federal Government is sent instead to the Treasury Head of each state that we live in to be held in escrow, then we put pressure on our Governors and our elected officials within the state to secede from the Union. No Union, No President. Some states, such as Oklahoma are already talking about starting their own militia. Why?? Because they see that we as a nation are about to become SLAVES of our government. Being only second generation American from people who escaped Socialist government, I've seen this coming since they first signed the Medicare bill into law and no one believed me. One person actually said to me "How bad can it get?" This is only the tip of the iceberg folks unless you are prepared to FIGHT. JUST HOW MUCH DO YOU TREASURE YOUR LIBERTY??

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    37. Ruth, St. Helena Island, SC says:

      Everyone has a lot to say about what is happening and what they ‘WISH’ could be done but no-one offers answers, In case you haven’t noticed, this President is DANGEROUS to our welfare; financially, healthfully, morally and to our security. These people are paid by us through our taxes and we’ve heard they are going to be hiring 16,000 more IRA agents, WHY?? Because they realize that sooner or later we will GET IT and stop paying taxes and they are going to need more people to FORCE us to do it. I maintain that the money in taxes that is deemed for the Federal Government is sent instead to the Treasury Head of each state that we live in to be held in escrow, then we pressure our Governors and our elected officials within the state to secede from the Union. No Union, No President. Some states such as Oklahoma are already talking about starting their own militia. Why?? Because they see that we as a nation are about to become SLAVES of our government. Being only second generation American from people who escaped Socialist government, I’ve seen this coming since they first signed Medicare into law and no one believed me. One educated person actually said to me “How bad can it get?” This is only the tip of the iceberg folks unless you are prepared to FIGHT. JUST HOW MUCH DO YOU TREASURE YOUR LIBERTY?

    38. Jackson, Denton, TX says:

      Just what we need, Barney (the dinosaur) and Dodd (the dud) in charge of and manipulating our finances. Haven't these bozos done enough damage with Freddie and Fannie ALREADY????

      Get rid of these crazed spendthrifts NOW…

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