Obama's legacy is set….
Biggest liar in Presidential history.
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Shutting the Revolving DoorPresident Obama has taken historic steps to close the "revolving door" that carries special interest influence in and out of the government by prohibiting former lobbyists from working on issues on which they lobbied or in agencies they previously lobbied and barring them altogether from holding future positions on advisory boards and commissions.
whitehouse.gov
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Ex T-man Geithner cashing in on Wall Street
Darrell Delamaide, Special for USA TODAY 1:20 p.m. EST February 9, 2016
(Photo: Robert Deutsch, USA TODAY)
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WASHINGTON – Timothy Geithner is finally cashing in.
After an appropriate stint at a think tank to write his memoir and a quiet transition to Wall Street, President Obama’s first Treasury secretary, who left office in 2013, is now ready to make millions thanks to help from a big bank he used to regulate.
Bloomberg News this week disclosed that Geithner has gotten a line of credit from JPMorgan Chase, the nation’s biggest bank, to invest in a new $12 billion fund at the private equity firm where he works, Warburg Pincus.
The filing with the New York Department of State does not give the amount of the line of credit or the terms, but according to Bloomberg, Warburg Pincus executives are signing up for a total $800 million and Geithner, as a top officer, is probably getting a sizable chunk of that.
The returns on the private equity investment are bound to be much higher than whatever interest Geithner will be paying on the loan, so he is virtually guaranteed to make many millions in profit on the deal.
Geithner of course was the Treasury secretary who pushed the bailout of the big banks, including JPMorgan, in the wake of the financial crisis, beating off anyone who wanted to discipline the banks or punish their executives with the argument that doing so would further destabilize the financial system.
His cosseting of the banks brought him into conflict with the chairman of the bailout oversight panel, Elizabeth Warren, the future senator from Massachusetts, and the inspector general for the program, Neil Barofsky, as well as one of the top bank regulators, then-FDIC chairman Sheila Bair — all of whom have documented their clashes with Geithner in recent books.
Geithner also failed to execute the government’s plan for mortgage relief to individuals in order to shelter the banks from losses, one of the reasons Barofsky titled his book Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.
Even before he joined the Obama administration, Geithner, as president of the New York Federal Reserve Bank, was part of the triumvirate along with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson who designed the bailout program that saved the banks – as well as the jobs and bonuses of most bank executives.
Moreover, it was Geithner’s failure as the frontline regulator for JPMorgan, a top player in the credit default swap market that was so key to the near-collapse of the global financial system, that enabled that speculative market to get completely out of hand.
So oblivious was Geithner to his duties as a regulator at the New York Fed that he told senators at his confirmation hearing as Treasury secretary, “I’ve never been a regulator.”
The disclosure this week of Geithner’s new ticket to fabulous wealth comes as the presidential primary has made Wall Street’s influence on Washington policy a top campaign issue.
Vermont's Sen. Bernie Sanders is hammering away at Wall Street influence, telling voters that the banks’ business model is fraud, and putting rival Hillary Clinton under constant pressure to explain her ties to Wall Street, including speaking fees from Goldman Sachs and other institutions.
There have long been critics of the revolving door between Washington and Wall Street, with top legal and financial talent putting in some time at a regulatory agency or Treasury post and then joining, or re-joining, their Wall Street firm to use their newly won information and contacts.
Clearly they weren’t going to be too tough as regulators for fear of alienating their future employers and clients.
But now, belatedly, there is a huge public backlash against this cozy relationship, spearheaded by Sanders and Warren, but also forcing Hillary Clinton to at least talk tough about Wall Street.
The erstwhile front-runner for the Democratic nomination even pledged this weekend to look elsewhere than Wall Street for top cabinet officials — unlike her husband, former president Bill Clinton, who made former Goldman Sachs co-chair Robert Rubin a key player in his administration.
Hollywood is fueling this public backlash. A miniseries dramatizing Bernie Madoff’s Ponzi scheme, which aired last week on ABC, witheringly portrayed a supine Securities and Exchange Commission, which smugly ignored a whistleblower who had figured out Madoff’s fraud.
In the meantime, the popular film, The Big Short, based on Michael Lewis’s 2010 bestseller, is regaling audiences with how unscrupulous operators exploited the unbridled speculation in the lax regulatory environment.
There is nothing illegal in Geithner’s actions — provided his tax software or advisor can correctly calculate what he will owe the IRS — but his willingness to cash in on his time in government completes the picture of him as a poster child for much of what ails our current financial system. |
