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Posts Tagged ‘Tim Geithner’

[Vox Video] Housing Crash Fix Explained From Geithner’s Perspective

May 13, 2014 | 11:03 am | fedny |

Former US Treasury Secretary Timothy Geithner is promoting his book chronicling the financial crisis Stress Test: Reflections on Financial Crises. Great book name, btw.

He sits down with Vox Media’s Ezra Klein to talk about what happened. I highly recommend watching this entire interview. Once you get past Ezra Klein’s sock selection, he touches on all the key points that would help us better understand what went wrong. It reconfirms why I enjoy reading anything Ezra writes.

I also have to say that Geithner has a great engaging conversational style that I enjoyed and helped me gain additional insights. However the problem with the Geithner’s responses – that I can’t seem to get past – is that Geithner was head of the New York Fed, surrounded by Wall Street, during the housing bubble run up. You walk away from this conversation feeling like his actions were the only appropriate responses to the crisis – ie focus only on the banks (and grow moral hazard significantly). Of course it has to be a nightmare to get anything done in Washington. However, I also got that same feeling when I read Andrew Ross Sorkin’s well written “access journalism” book, “Too Big To Fail” – that saving the banks was all that mattered to him.

It doesn’t help that I read previously Neil Barofsky’s terrific book “Bailout” which provides a lot of insights into how the sausage was made – identifying the US Treasury’s exclusive focus on the banking system when there were opportunities to help main street at the same time. Apparently Geithner takes Barofsky to task in the book, probably because Barofsky did the same.

I’m not sure if I’m going to pick up a copy.

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[Daily Show] Geithner’s Home Pricing Strategy, Shiller Provides Decorating Ideas

July 31, 2009 | 12:58 pm | trulialogo |
The Daily Show With Jon StewartMon – Thurs 11p / 10c
Home Crisis Investigation
www.thedailyshow.com
Daily Show
Full Episodes
Political HumorJoke of the Day



Hat tip to Trulia Blog. This is LOL.


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[Damp Squib?] Financial Regulatory Reform Is Sort of Here

June 16, 2009 | 11:47 pm | nytlogo |

A phrase that’s being thrown around lately, damp squib.

The phrase “damp squib” has since come into general use to mean anything that fails to meet expectations. The word “squib” has come to take on a similar meaning even when used alone, as a synonym for dud.

Because this will take a year to enact through legislation, I wonder whether it will be relevant when the final version in place? Banks will probably be stronger. Wall Street will be in somewhat better shape. Still, I am hopeful this will be a productive effort, given the lack of effective regulation that enabled a whacked out credit environment.

On Monday, Timothy Geithner, secretary of the Treasury and Lawrence Summers, director of the National Economic Council wrote an Op-Ed piece for WaPo called A New Financial Foundation. Here’s the conclusion:

By restoring the public’s trust in our financial system, the administration’s reforms will allow the financial system to play its most important function: transforming the earnings and savings of workers into the loans that help families buy homes and cars, help parents send kids to college, and help entrepreneurs build their businesses. Now is the time to act.

The administration has been working hard to develop a plan.

The earlier vision was a super agency and the elimination of a number of existing agencies that overlap each other. Turf wars continue to be a real issue.

Tonight, the administration released the details of the plan to revamp the financial regulatory system, one of many aspects of the financial system that didn’t function.

Here’s the white paper on the plan.

The Obama administration last night detailed a series of proposals that would involve the government much more deeply in the private markets, from helping to steer consumers into affordable mortgage loans to imposing new limits on the largest financial companies, in a sweeping effort to prevent the kinds of risk-taking that sparked the economic crisis.

The plan is an attempt to overhaul an outdated system of financial regulations, according to senior administration officials.

It would vastly increase the powers of the Federal Reserve in an effort to create stronger and more consistent oversight of the largest companies and most important markets.

It also would create a new agency to protect consumers of mortgages, credit cards and other financial products.

I’m hoping something constructive comes out of this and not simply more regulation. This is being done in the name of prevention, and has limited impact on the current situation in the housing/mortgage/credit markets.

I can’t over the feeling that we will end up creating regulations for what we went through rather than where we are going.


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[Geithner Stress] SNL Calls Out The Low-ball Exercise of Ignorant Bliss

May 13, 2009 | 10:08 am |

Kudos to SNL for being able to carry this off – it’s as good as an earlier Geithner skit.

Robert Kuttner, in his piece in the Huffington Post called Collateral Damage and Double Standards writes about a recent Fed conference on the stress test:

At one point in his remarks, Bernanke, recounting just how rigorous the stress tests were, explained that “More than 150 examiners, supervisors, and economists” had conducted several weeks of examinations of the banks. That kind of let the cat out of the bag. If you do the arithmetic, that is about seven supervisors per bank, and all of the stress-tested 19 banks were hundred-billion and up outfits. When an ordinary commercial bank, say a $10 billion outfit, undergoes a far less complex routine examination of its commercial loan portfolio, it involves dozens of examiners.

So the stress test was not a set of rigorous examinations at all, but a modeling exercise using the banks’ own valuations of their assets.

It’s kind of like trying to help the economy by providing aid to large corporations who are most visible, yet represent only a small portion of the economy. On second thought big banks don’t represent a small part of the economy so I guess I am referring to the absence of help to a large portion of the banking system – lenders with less than $10B in assets.

A slow leak of information, talk of green shoots and glimmer fill the headlines when it comes to banking. It’s $75B rather than $3.6T we should probably be talking about.

Why does this matter to real estate? Cause it’s linear.

Banks => Credit => Housing

Actually I am not sure I disagree with the Geithner/Bernanke mindfreak that we are seeing since it seems to be helping restore some confidence in the future of the economy. I guess I get irritated when I know am being managed or perhaps, (my) ignorance would be bliss (ful).


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Wait A Second, Perhaps There Isn’t A Housing Crisis?

April 14, 2009 | 1:03 am |

I always thought the word crisis wasn’t the right word for the situation we find ourselves in these days. I see this more as a housing reset. It’s when the issue crosses over into the mortgage/credit arena, then we are in a crisis – sort of a technical malfunction. Massive de-leveraging = a crisis I suppose.

There’s a good article in Forbes called, oddly enough: “The Housing Crisis Isn’t A Crisis.”

This brings us to Zywicki’s disagreement with the Obama administration. Treasury Secretary Timothy Geithner, Director of the National Economic Bureau Lawrence Summers and the other adepts in the administration all argue that the bursting of the housing bubble amounts to a national tragedy. According to President Obama himself, the “crisis” is “unraveling homeownership, the middle class and the American Dream itself.”

…and we start to realize how much power the financial services sector wields over Washington policy makers. This is best explained in Simon Johnson’s piece in The Atlantic called The Quiet Coup.

Of course many find it easier to simply blame the person in closest proximity in this fun piece in Salon by Erica Ferencik called They shoot real estate agents, don’t they? Erica bills herself as “a recovering stand-up comedian and featured guest on NPR’s “Morning Stories.” I recently plugged her recent novel, “Cracks in the Foundation” which is a good read. Erica promised me an Orange Julius or a mention of my eventual first book in her blog, whichever comes first.


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[Planting A Garden] DJIA Surge = Better Mood = More Home Sales

March 23, 2009 | 11:32 pm | nytlogo |

Who says the Dow Jones Industrial Average has anything to do with the outlook for the housing market?

I am certainly skeptical, and get downright annoyed every time someone would refer to the DJIA result that day as a litmus test for some sort of national mood.

Yet people seem to be feeling a little better about things (the economy/housing) today than a few weeks ago. Here’s a chronology of cause and effect (DJIA rises and home sales rise) conveniently edited to make my point:

First of all, this has been one heck of a busy news cycle and the path from DJIA to rising home sales is obvious.

Secondly, I need to splash some cold water on my face and get back to work.

Aside: we don’t need bipartisanship.

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[Risk as a Bonus] US Treasury Makes Another Attempt To Fix Economy, Housing

March 23, 2009 | 11:21 am | nytlogo |

Last week, Dan Gross at Newsweek wrote a fun piece on Slate/Newsweek called “Jump” (not a a correlation with the old Van Halen song). Basically he says that nothing the government can do will fix the economy unless we participate.

In the grips of a bubble mentality, we—as investors, consumers, and businesses—blithely assumed risk and convinced our­selves it was perfectly safe to do so. We bought houses with no money down, took on huge amounts of debt, and let the booming stock and housing markets perform the heavy lifting of saving.

I remember the ridicule the former president took for his previous economic fix after 9/11 – “Shop!” else we enter the “paradox of thrift.

If everyone saves during a slack period, economic activity will decrease, thus making everyone poor­er. We also need to start investing again—not necessarily in the stocks of Citigroup or in condos in Miami. But rather to build skills, to create the new companies that are so vital to growth, and to fund the discov­ery and development of new technologies.

I am not suggesting that shopping is solution, but it is certainly part of the problem right now. When consumers and investors hunker down and do nothing, a failure spiral results.

Today Secretary Geitner announces the plan we have been waiting for, which is heavily reliant on the private sector. US Treasury secrectary Geitner unvailed his second attempt at getting the economy moving again and this time there is probably no room for a do-over. Did he really call it “My Plan”?

We cannot solve this crisis without making it possible for investors to take risks. While this crisis was caused by banks taking too much risk, the danger now is that they will take too little. In working with Congress to put in place strong conditions to prevent misuse of taxpayer assistance, we need to be very careful not to discourage those investments the economy needs to recover from recession. The rule of law gives responsible entrepreneurs and investors the confidence to invest and create jobs in our nation. Our nation’s commitment to pursue economic policies that promote confidence and stability dates back to the very first secretary of the Treasury, Alexander Hamilton, who first made it clear that when our government gives its word we mean it.

Of course Hamilton was shot dead in a duel. Let’s hope this strategy has a quicker draw and better aim.

Here’s the official press release and fact sheet posted this morning.

Here’s the problem with the AIG bonus outrage that fueled this modification of plans – it’s not about being scared of keeping AIG and other Wall Street firms afloat and it’s not about the obscene lack of morality – it’s about the danger of scaring off the private sector from participating in the solution. It’s called “Free Market.”

Council of Economic Advisers Chief Christina Romer said:

“We’ve got banks with a lot of toxic assets, what ‘toxic’ means is they are highly uncertain … so that is certainly the big picture, and that is going to be the main reason for doing this … We simply — we simply need them. We need them — you know, we’ve got a limited amount of money that the government has to go in here, so we need to partner, not just with private firms, but with the FDIC, with the Fed, to leverage the money that we have,” she said.

$165M AIG bonuses (actually it’s $218M) and it’s symbolism of greed have been a distraction and we have to be very careful of taking our eye off the ball. Cut out the “Main Street versus Wall Street” homilies and let’s fix this.

Congress underestimated consumer outrage and the House quickly passed retribution legislation to get even via a 90% tax. Because the political playing field is incentivized by one-upsmanship, Congress is much more comfortable with this sort of grandstanding/finger pointing and that’s what this debate has regressed to. Dodd is in hot water.

It began with the previous legislation of caps on Wall Street compensation (when Congress didn’t catch it), while a feel good measure, is also a short sighted position much more apparent now because there will always be work-arounds.

I love how many simply lump all Wall Streeters into one evil pile and feel it’s right to treat everyone the same. It’s professional prejudice on steroids. A market for the “toxic” assets needs to be fostered. Do we want to get out this mess or not? No room for populist shortsightedness.

More on the plan later. In the meantime I need to download that song from iTunes - it’s systemic so we might as well jump.


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[SNL Goes Geitner] 1-800-Ideas?

March 10, 2009 | 12:03 am | wsjlogo |

Play the clip

[Be patient for clip to load: Like waiting for financial stability: video takes about 2 minutes to load]

I’ve been a bit video-centric as of late. It’s simply amazing to think that the US Treasury Secretary can be parodied on SNL and most people get the humor. Geithner has gotten a pass so far.

Here’s his proposed plan submitted last month and press release.

  1. Financial Stability Trust: A Comprehensive Stress Test for Major Banks, Increased Balance Sheet Transparency and Disclosure, Capital Assistance Program

  2. Public-Private Investment Fund ($500 Billion – $1 Trillion)

  3. Consumer and Business Lending Initiative (Up to $1 trillion)

  4. Transparency and Accountability Agenda – Including Dividend Limitation

  5. Affordable Housing Support and Foreclosure Prevention Plan

  6. A Small Business and Community Lending Initiative

Housing doesn’t rebound until financial stability is established.

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