Geithner Protects His Pals

From the NYT:

Abandoning any pretense about limiting the moral hazards at companies that made foolhardy investments, the plan also will not require shareholders of companies receiving significant assistance to lose most or all of their investment…

Nor is the government announcing any plans to replace the management of virtually any of the troubled institutions, despite arguments by some to oust current management at the most troubled banks.

Finally, while the administration will urge banks to increase their lending, and possibly provide some incentives, it will not dictate to the banks how they should spend the billions of dollars in new government money.

It looks like the $350 billion remaining in TARP is also going to money heaven. I would have been surprised if Geithner had suggested anything different.

It’s business as usual in NYC, and despite Obama’s pretty words last night, it’s BAU in DC as well. We continue to be fucked.

And for all of its boldness, the plan largely repeats the Bush administration’s approach of deferring to many of the same companies and executives who had peddled risky loans and investments at the heart of the crisis and failed to foresee many of the problems plaguing the markets.

From Jeffrey Klien at HuffPo:

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.

We’ve elected an empty suit… again.

Allow me to explain what is happening. You have the combination of a failed Kenyan civil servant and a Kansan furniture salesman in the guise of our president, clawing his way to the top. He will not stand against the bankers, for it is among them he most wants to be. His chromosomes understand that money is power.

At this moment in time, we may have been better served by that heroic old fighter pilot and POW, John McCain. He’s just rich and crazy enough to tell them to go to Hell.

Instead, we are in the hands of a young man in a hurry.

From David Sirota at Open Left:

The good news is that at least there seems to be something of a debate inside the administration, however tepid. The bad news is what I and others predicted: namely, that progressives seem to have been ghettoized into the political/salesmanship jobs, the conservative zombies shaping policy aren’t interested in having any debate with them. Worse, we’re now learning that those zombies are as rigidly ideological as their initial policies seemed to suggest.

A commenter says allowing neoliberal economists to prevail is political suicide. So much for the audacity of hope. Not even 30 days after the inauguration, Obama has destroyed his credibility by failing to break with the criminals in charge during the previous much maligned administration. He’s a one term president.

The first lesson of war is to recognize the enemy.