First of all I don’t think Geithner caused the financial crisis. He certainly contributed to it but it probably would have happened even if he had not undercut Sheila Bair at every opportunity; and yes he should have listened to other people who were saying that the corruption on
Wall Street had reached epic proportions.
Second, I think that neither Geithner nor his predecessor,
Hank Paulson, as Treasury secretaries, had a real understanding of the crisis at any time up through today. And their bosses, Presidents Bush and Obama were even more clueless. And while they are probably culpable for their negligence and mismanagement of the crisis, the foreclosure madness would have occurred anyway.
Third, it is my belief that the culprits on Wall Street with all their tentacles stretched out across the globe were unstoppable by anyone except a good government with the resources to actually get to the bottom of it. What was missing was the desire to get rid of the problem and the naivete of the leaders in government in failing to notice that the entire banking industry was engaged in faking transactions and documents — and failing to ask why that was necessary.
Fourth my opinion is that the fault lies with the failure of anyone in government to learn anything relevant about the industries they were supposed to be regulating. If they had done so, starting in 1983 when derivatives became adolescent, the adult would have been far more tame and the crises would have been averted entirely.
Homeowners did not create the crisis. Tens of millions of homeowners did not congregate in a room thinking up 450 loan products when there were only 4 or 5. And saying they had bad judgment would absolve almost any perpetrator of economic crime because his victim was too stupid.
The laws were already in place. It was knowledgeable people that were missing. We needed and had faithful servants of the people — but as a society and as a nation each country contributed to the enormous problem that has now been created. And we will keep paying for it as banks take over all commodities we hold dear and “legally” corner the markets with stolen cash and property.
In Nocera’s article on
Bankrupt Housing Policy, he points out that ” in the course of perusing another new book about the financial crisis, “
Other People’s Houses,” by Jennifer Taub, an associate professor at
Vermont Law School, I was reminded of an effort that took place in the spring of 2009 that could have made an enormous difference to homeowners, one that would have required no taxpayer money and might well have become law with a little energetic lobbying from the likes of, well,
Tim Geithner. That was an attempt, led by
Dick Durbin, the
Illinois senator,
to change the bankruptcy code so that homeowners who were underwater could modify their mortgages during the bankruptcy process. The moment has been largely forgotten; Taub has done us a favor by putting it back on the table.”
He goes on to say that he had correspondence with Sheila Bair who was undermined and stomped on by the Obama administration for even thinking about relief to homeowners. She was head of the FDIC and prevented from doing her job by a bankrupt policy of save the banks and damn the homeowners. “Because, as Bair told me in an email, “It would have been a powerful bargaining chip for borrowers.” Without the ability to file for bankruptcy, underwater homeowners unable to pay their mortgages were helpless to prevent foreclosures. With it, however, servicers and banks were far more likely to negotiate the debt load. And if they weren’t, a bankruptcy judge would rule on the appropriate debt to be repaid. For all the talk about the need for principal reduction, this change would have been the easiest way to get it.”
According to
Adam Levitin, in the same article by Nocera, this should have been a “no-brainer.” I take that too mean that as I have explained above, brains were in short supply during the worst of what we have yet seen of the economic crisis that most of us think is not even half over. Obama may be leaving the crisis as his legacy not because he caused it but because he didn’t do anything about it — or at least anything right.
And I obviously agree with Nocera’s ending comment — “Why is it that the fear of moral hazard only applies to homeowners, and not to the banks?”
Gretchen Morgenson says Geithner admitted he was inept at times. ““We were human.” But
this fails to address head-on the possibility that he was a captured regulator, a man locked into the mind-set of the very bankers he was supposed to oversee.”
Gretchen reports without objection from Geithner — “Last week, I asked Sheila C. Bair, the former chairwoman of the Federal Deposit Insurance Corporation, for her recollection of these events. She replied with an email recalling that in 2006, she attended her first Basel Committee meeting, the international negotiations that Mr. Geithner was referring to. While there, she pushed unsuccessfully to raise bank capital levels.
Why was she unsuccessful? “I was actively undermined by the Fed, the New York Fed and the comptroller of the currency,” she said. “I later complained to Tim about the way his representative on the Basel Committee had undermined me. He was unapologetic.”
Gretchen has not been given the resources to prove the corruption on Wall Street, but she knows it is there and as the fourth estate the NY Times should have provided her with a blank check for what would have been a Pulitzer or even a Nobel prize. for now we can only agree with her — “We were the lenders of last resort and should have been paid an enormous premium for the use of our money. We were not.”
There are suddenly a spate of articles on what went wrong because Geithner wrote a book and is selling it enhancing his own fortunes while he presided over the worst hit the middle class has had in our history.
Here is what investigators should have been looking for:
Behind door number 1 were the fools. These are the money managers who for reasons the defy explanation did no due diligence and bought empty mortgage bonds issued by a trust that was never going to receive the money, the loans or the property.
Behind door number 2 were the wolves of Wall Street including all the different brokers, dealers, banks, rating agencies and insurers, all the mortgage brokers, real estate brokers, and closing agents and title companies all in league to take as much money as they could out of the system and the hide it behind shadow money equivalent to ten times all the actual money in the world.
Behind door number 3 are the victims. These are the people who knew nothing about mortgages, derivatives or anything else. In the end they were convinced by super salespeople that they could never understand how they could afford the loan nor could they even understand why they must do it anyway. In Florida alone 10,000 such sales people were convicted felons. And yet when we talk of moral hazard we speak of people, and not banks. Why is that?
Filed under:
AMGAR,
education,
escrow agent,
foreclosure,
Occupy Movement,
Title Tagged: |
Barack Obama,
George W Bush,
GRETCHEN MORGENSON,
Hank Paulson,
JOE NOCERA,
New York Times,
Sheila Bair,
Timothy F. Geithner
The Ultimate Failure of Tim Geithner - nationalinterest.org
Sheila Bair: Why I recommend Tim Geithner's book
Former head of FDIC says Timothy Geithner has it wrong
Geithner...and furthermore
Op-Ed Columnist: Bankrupt Housing Policy
Unanswered Questions on Geithner
What Tim Geithner Got Right
It's Geithner Vs. Warren In Battle Of The Bailout
Sheila Bair on the Business Cycle
Neil Garfield Show on Foreclosure Defense 01/30 by The Neil Garfield Show | Finance Podcasts
There are two lawyers out of Coral Gables Florida named Andrew Braaksma supervised by Paul McKenna who we believe may have broken State and Federal Laws. We also believe that they may have severely violated many rules of the Florida Bar. We also believe that they are destroying the integrity of our courts and our legal system. They along with their clients (US Bank and SN servicing) have uttered forgery and submitted Forged deeds in court and that is a crime because they know and have now seen the evidence. Very credible well known highly respected Notaries have come forward with sworn affidavits proving that the documents they used are forged. If these document are in fact forged and have crossed state lines which we believe they have, then why aren’t these people being prosecuted for federal anti forgery crimes? I have spoken to many victims of US Bank that are saying the same thing that their deed are forged, How can this keep going on In America? We have to file a criminal conspiracy lawsuit against these attorneys when it is clear that the state should step in a stop them from what they are doing. We believe that RICO charges may apply, please defend the good people of Florida against this type of fraud on our courts. Most people will lose their homes when they shouldn’t, most people lost their homes because the banks have a mountain of money and they beat down anyone who fights them. They just keep hiring other attorneys who can claim that they didn’t know the documents were forged, but you know most are, the OCC knew they are and any reasonable person now knows that crimes are being committed by the banks and no one is going to jail. The Board of Directors of US Bank, SN Servicing and their attorneys like Andrew Braaksma and Paul McKenna need to be prosecuted if they have broken the law. Please investigate these men and put a stop to this. Ray Shelton
Only of the borrowers, never the banks”. This is just another crystal-clear example of how stacked the deck is against the borrower. The judges as well as a good percentage of attorneys really must be idiots. Plain and simple, people with an IQ comparable to the common sea sponge, or toasters and other small household appliances. I mean enough is enough. Can’t they extrapolate outward to infinity and see the damage and looming consequences of their actions or lack thereof? Foreclosures, broken homes, suicides, deteriorating neighborhoods, insolvent or poorly performing pension funds due to purchases of MBS bogus REMIC’S?
Get on your horse and do something . In too busy paying
My ” mortgage”
NEVER AGAIN
Nuremberg Trials.
So no wonder the banksters are getting away with it. It doesnt take a genius to figure it out. You have no chance. Just like any team playing against the Harlem Globetrotters.
https://darwinbondgraham.wordpress.com/2014/05/19/california-appellate-court-judges-ownership-of-stocks-and-bonds-of-financial-companies/