David Brooks Misses the Point

David Brooks' New York Times op-ed column today on Tim Geithner (mentioning in the lead my Portfolio cover story) misses the point, I think.

The problem with Geithner's approach is not whether or not the banks are recovering because of the TARP program, but the degree to which the profits of the biggest banks have not been matched by a commensurate ability to lend.

Money is still tight. A couple of weeks ago, the Federal Reserve reported that banks "kept tightening lending standards for companies and consumers last quarter, reinforcing the central bank’s decision to leave its benchmark interest rates at record lows for a long time."

Simply put, the absence of a continued bank-caused financial crisis is not a reason to cheer. The public is justifiably upset that all those billions of dollars have made bankers richer without showing any benefits in terms of loosened lending policies. That's not an unreasonable expectation, and enough time has passed that people have a right to ask: what's in it for me? Why have we not seen any benefits to the population as a whole (apart from the banking system not falling apart) from the TARP program?

I don't believe that history will be kind to Geithner, or President Obama, if all he can show for his efforts, and our billions, is the absence of a crisis.

© 2009 Gary Weiss. All rights reserved.

Northern Trust Puts on the Ritz

Peter Cohan today tells the stomach-turning story of the TARP-fed bank Northern Trust, which evidently believes we're still in the Roaring Twenties and not 1930, throwing a huge soiree at taxpayer expense.

The source of this scoop is the celebrity website TMZ.com, which says:

Northern Trust, a Chicago-based bank, sponsored the Northern Trust Open at the Riviera Country Club in L.A. We're told Northern Trust paid millions to sponsor the PGA event which ended Sunday, but what happened off the golf course is even more shocking.

Northern Trust flew hundreds of clients and employees to L.A. and put many of them up at some of the fanciest and priciest hotels in the city. We're told more than a hundred people were put up at the Beverly Wilshire in Bev Hills, and another hundred stayed at the Loews Santa Monica Beach Hotel. Still more stayed at the Ritz Carlton in Marina Del Rey and others at Casa Del Mar in Santa Monica.

The shocking part is that Northern Trust has lapped up $1.6 billion in taxpayer bailout money.

Cohan adds:

I just feel sorry for Northern Trust's 450 workers who lost their jobs in December, 4% of its workforce. And did I mention the biggest suckers of all? You and me are on the hook for this LA blowout. And unless the government steps in, there seems to be nothing to stop them from partying again -- they sure must think we're fools.

© 2009 Gary Weiss. All rights reserved.

Thank You, Mr. Ackerman

It took two and a half hours, short before the conclusion of the morning session of the House Financial Services Committee hearing today, for a member of the panel to ask the eight assembled bankers to provide a detailed accounting of what they've done with all that TARP money.

Gary Ackerman of Queens, who usually excels at banging his fist, made the request just as I suspect pretty much everyone watching this lackluster hearing was beginning to nod off.

That will make interesting reading. Thanks for asking, Mr Ackerman.

The hearing resumes at 1:15 p.m. Perhaps we can get less grandstanding, fewer inquiries on the significiant but off-topic issue of credit cards (a subject near to my heart, believe me) and more on TARP, more on lending, more on other central issues.

© 2009 Gary Weiss. All rights reserved.

Obama Confuses Markets With 'Wall Street'

I don't think there's much doubt that the Geithner Selloff yesterday was a reaction of the financial markets as a whole to Treasury's Paulson Lite bank bailout plan. So I was disappointed to see President Obama dissembling on that subject in an interview with ABC News last night.

"Wall Street I think is hoping for an easy out on this thing and there is no easy out," Obama told ABC's "Nightline" program when asked about the markets' negative verdict to the plan.

"Essentially what you've got are a set of banks that have not been as transparent as we need to be in terms of what their books look like," the president said in excerpts of the interview.

Essentially what you've got is Obama ignoring the vehement concern about Paulson Lite from investors--and the approval of the plan by Wall Street.

As AP pointed out in an article today,

Industry groups heaped praise on the proposal, which Treasury Secretary Timothy Geithner unveiled in a speech Tuesday.

"We are encouraged by the creative and wide-reaching suite of programs outlined today," Tim Ryan, chief executive of the Securities Industry and Financial Markets Association, said in a statement that endorsed each point of Geithner's plan.

"It's big, it's bold, it's tailored, it's targeted," crowed Scott Talbott, a lobbyist with the Financial Services Roundtable.

The news media has been, I think, a bit too gentle on the Obama administration on this vital issue. When Obama misrepresents something basic like this, the media needs to call him to account.

© 2009 Gary Weiss. All rights reserved.