Thursday, January 22, 2009

Say It Ain't So, Barack

Can someone please tell me how we are still even talking about nominating Barack Obama's choice for Treasury Secretary Tim Geithner, the current head of the New York Fed, and a key player in the financial bailouts in this country? Let's review.

First, despite what you will hear from the Obama camp, Geithner is the man who is widely blamed as the biggest proponent of the decision to let Lehman Brothers fail last fall, setting off a chain of events that very quickly turned 2008 into the worst bloodbath for the U.S. stock markets since the Great Depression, and leading directly to the failure (or essential failure) of several other key U.S. banks, including Washington Mutual, Wachovia, Citigroup and Bank of America. It was Geithner who is said to have been vocal in letting Lehman go, and instead working with Treasury Secretary Hank Paulson to arrange the hasty marriage between Bank of America and Lehman rival Merrill Lynch in mid-September, which now is blamed by Bank of America for nearly $20 billion in then-unknown losses and ultimately led that bank needing an additional $25 billion from the federal government this month in addition to over $180 billion in loan loss guarantees. Geithner arranged the meetings among the largest investment banks in New York, he led many of the talks along with Treasury Secretary Hank Paulson, and overall he took a leadership role in the discussions regarding the future of Lehman Brothers, and again, it is he who is said to have been the one man in the room supporting most strongly allowing Lehman to go under.

Moreover, this whole bank bailout bill has been pretty much an unmitigated disaster since the moment it was first (ill-) conceived. People do not argue this. Why then do I keep hearing President Obama proclaim the importance of having someone like Geithner, who has been heavily involved in TARP from the beginning, stay on as the new Treasury Secretary? If this were up to me, I would sure as hell want to see an outsider come in who is without ties to the bailout and to anyone who was involved with its inception, to oversee Treasury heading into the new administration. Frankly, bringing in someone intimately involved with TARP sounds like just about the worst possible idea to me. And don't get me wrong, I'm not advocating bringing in some nobody with no experience in banking or finance to run Treasury going forward. But there are literally hundreds of well-qualified candidates out there, even friends of the Obama camp like Larry Summers, Warren Buffett, etc. who are not already tied emotionally and personally to the TARP plan. Bringing in Timothy Geithner to lead Treasury for the next four years at least does not at all give me the confidence that the bailout will be handled or addressed properly from here, or that the many, many problems with the implementation of TARP will be adequately fixed.

But all this is just the appetizer when it comes to the problem with Tim Geithner serving as Treasury Secretary. One of the many duties of the Treasury Secretary is to function as the main oversight for the Internal Revenue Service, the organization we all know and love for administering the federal tax program in this country. Tim Geithner, meanwhile, failed to pay his fucking Social Security and Medicaid taxes, for four years from 2001-2005 while he was working for the IMF! Geithner for his part claims he "did not know" that the IMF was not withholding Social Security and Medicaid from the checks they sent him during those four years of his employment there, and to that let me ask you this: how many of you out there do not know whether Social Security and Medicaid taxes are being deducted from your paycheck at work? Seriously now. The two biggest slices of non-income tax that there are, and this guy, a finance professional working for the IMF, just never realized that these major deductions were absent from his checks for four years?

Come the fuck on! The guy lied on his taxes and failed to pay amounts he knew he was obligated by law to pay, and he did so for four fucking years, until just very recently. Although Geithner had previously paid the back taxes for two of those four years, anybody wanna guess when he paid the last two years' worth of unpaid back taxes to the IRS? Try just days before Barack Obama nominated Geithner for Treasury Secretary late in 2008.

This is the guy we want overseeing the IRS? This is the best fucking candidate Mr. Obama can come up with for Treasury Secretary? A guy who is known within finance circles in New York for being one of the primary butchers of the extreme situation facing the investment banks last September, and a guy who elected not to pay Social Security and Medicaid taxes for four of the last seven years, only paid some of them once he got caught, and only paid the rest when he knew that the incoming president wanted him to serve on his Cabinet.

Either Timothy Geithner is so stupid that he does not understand the way the most basic of taxes work in this country, or he knew he owed those taxes but simply refused to pay them. You can choose. Either way, by continuing to push for the nomination of this man for Treasury Secretary, Barack Obama is setting a damn sad example of a continuation of the hypocrisy and sleaziness of the prior administration in this country. For a man who spent his inauguration arguing for a new era of "personal responsibility", putting Geithner in charge of the IRS is just about the greatest abomination imaginable.

What's next? Bernie Madoff in charge of overhauling hedge fund accounting?

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Blogger Astin said...

See, him leting Lehman fail is a plus in my book. Not letting Merril fail though, is a negative. In the first case, he allowed the free market to run freely, in the second, he didn't.

As for taxes, wouldn't everyone want a tax cheat in charge of the IRS? Don't you stand a better chance of getting away with not paying taxes then? Use the Geithner defense!

I'd like to see Peter Schiff or even Ron Paul (who is advised by Schiff) in a position of importance. There's aren't a lot of followers of the Austrian school of economists in the States, but in this situation, they've been dead right.

12:37 AM  
Blogger Alceste said...

Doesn't really make a difference, but he did pay his "employee" share of the taxes (which is the part all of us see). He failed to pay the "employer" half of the taxes (which everyone just assumes their employers do). That said, he was specifically told that IMF was not going to pay the employer portion, so his honest mistake excuse is flimsy.

1:06 AM  
Blogger Gmello said...

What is this, a half assed version of the Economist? Man leave the politics and economics to the experts, you're all over the map, stay on point, it's a poker blog.

12:19 PM  
Blogger OES said...

It's his blog moron. He can post whatever he wants.

10:45 PM  

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