Tim Geithner's roll-out-plan-to-rescue-America's-banks has been postponed again, at this writing until Tuesday. The frequent postponements subtract from the already-diminished ethical stature Geithner brings to his office. Then again, given the Obama administration's compromising instincts, even a prompt, untainted Treasury Secretary isn't likely to restore confidence.
Reportedly Geithner will soon tell us that the government plans to offer incentives for private investors to bolster good banks. When Geithner announces this, taxpayers will see subsidies streaming from their own pockets to the Masters of the Universe, who are already gaming a new system.
When Geithner says that the fortified good banks will be required to increase their lending, loan-seekers will sigh, "Bullshit."
When Geithner explains how the Treasury will "ring fence" bad assets, Americans will realize their own economic futures have been locked inside a toxic dump.
As for phrases like "tough new strictures," "increased transparency," "reasonable executive compensation" and "the right kind of government guarantees," Geithner should just save his breath.
The fundamental problem seems to be that our new president is a lawyer lightly versed in economics. His understanding of our financial crisis is not in the same league with his many other gifts. To help himself out, he's hired the very people who created the crisis. Their impulse is to create ever more complex financial fixes. And to police these fixes and their shifting capital requirements, they've hired in from the private sector (from PriceWaterhouseCoopers, Ernst & Young) the same auditors trained to look the other way.
Does this make you brim with confidence?
Obama's initial missteps are politically and morally shocking. Like Bush, his first instinct has been to protect the status quo. He wants to save the banks. Why? If there is profit to be made, new banks will spring up in their stead. There is no sound reason -- nothing the experts know that you don't -- to transfer private debt into public debt, where it will eventually result in decreased services, increased taxes and crippling inflation.
Is Obama rationalizing that his efforts are stabilizing? Citizens are already de-stabilized by Obama's perpetuation of Bush's ruling class rules: heads they win, tails you lose. Common sense and fair play dictate that financial shortfalls must wipe out bank equity and bond holders before anyone else. This should be non-negotiable. Why is Obama stooping to negotiate?
And what about the $78 billion that citizens overpaid in the first TARP Bailout? Who in the Treasury Department is being held accountable for this enormous loss? Hank Paulson didn't act alone.
By not punishing anyone -- excessive risk-takers, complicit bureaucrats, bait-and-switch bi-partisans -- Obama looks weak. When he comes before the public speaking with fake fury, we fear that he's been shaken and compromised in private first. Even if Obama's popularity isn't diminishing, his reputation is.
So soon after so many citizens were thrilled to have elected a black president, it's terrifying to contemplate that we may have elected a Gray Davis. You may remember that Davis was the California governor who was recalled from office because he reacted slowly and timidly to the electricity crisis that Enron intentionally created. "Fat Boy", "Big Tuna", "Donkey Punch", "Ping Pong", "Russian Roulette", "Sidewinder", "Spread Play", "Death Star", "Forney Perpetual Loop", "Ricochet", "Black Widow", "Big Foot", "Red Congo", and "Get Shorty" were some of the names Enron gave to the swindles it concocted. If you don't think that similar swindles under the guise of national financial recovery are being hatched on Wall Street today, I have a bank I'd like to sell you.