Tuesday, February 10, 2009

Tim Geithner Shows His Inner Paulson

The market giving Tim Geithner a Bronx cheer

The New York Times this morning described how the Treasury's new bailout plan is shaping up to be a complete sellout to Wall Street, a kind of Paulson Lite with absolutely zero requirements for banks to lend and zero restrictions on executive pay.

And no, forcing banks to file "monthly reports" on what they're doing or not doing is not the same as forcing them to lend.

Kind of makes sense. The Washington Post reported today that Geithner walked away from the New York Fed with more than $500K in severance, unused vacation time and other goodies. I guess he'd have a hard time talking about stuff like executive comp with a straight face when he's getting a nice little golden parachute himself.

No, strike that. In his speech he did talk about executive comp with a straight face. He's just not going to do anything about it, according to the Times.

As for that swell gelt, the Post says:

According to an official at the New York Fed, Geithner's severance is from a supplementary retirement plan that would have begun paying out when Geithner turned 55. Geithner is 47, and the board decided to give him the cash equivalent, the official said.
How nice! Say, who is on that board anyway? Here is a link to a list of the members of the board of the New York Fed. Let's see... Jamie Dimon, Jeff Immelt.... some guy from Adirondack Trust ... some guy from Banco Popular. Steve Friedman of Stone Point Capital, the CEO of Pepsico. Well, I'm glad there's no conflict of interest involved, no one who could ever, possibly need the assistance of the Treasury for any reason whatsoever.

Am I being harsh? Maybe. But I am sorely disappointed with what I've seen so far from the Treasury. Sweet severance packages just don't make it seem any better.

According to the Post, by the way, new SEC chairman Mary Schapiro gets an even more magnificent chunk of change from FINRA. Kraft Foods and Duke Energy.

Maybe now Geithner can afford a competent accountant to prepare his tax returns. Schapiro, of course, now has "f. you" money, and I think we can confidently expect that unless she amazes all of us, she is going to give the finger to investors during her tenure.

The market sold off sharply while Tim Geithner was in the middle of his flat, vague, specifics-bereft and uninspiring televised presentation. I guess that makes it unanimous. You'd think that at least bank stocks would appreciate the unwarranted gift their shareholders are about to get from Uncle Sam, but that didn't happen either. Stocks like Citigroup led the selloff.

Why? Here's my guess: the market, like the rest of us, wanted something new, something different, some leadership, and didn't get it. We expected transparency, and instead we got zero details. As a matter of fact we (and that includes Obama himself) expected a press conference and we got a speech to Treasury employees.

UPDATE: Geithner appeared on CNBC later. More rhetoric, more evasions, and the words "complicated" and "difficult" used about two dozen times.

© 2009 Gary Weiss. All rights reserved.

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