The Barons of Wall Street rise in Geithner's defense as does Senator John McCain, whose own whoring for bank fraud is legendary: directly in the case of Lincoln Savings, and indirectly through his son Andrew in the case of Silver State Bancorp. There is much for these defenders of the Treasury Secretary to support based on the recent commentary issued regarding Geithner's latest version of his toxic asset recovery plan.
CalculatedRisk posts that "This [plan] amounts to a direct subsidy from the taxpayers to the banks." Paul Krugman, who knows enough about economics to have been awarded a Nobel Prize in 2008, analyzed Geithner's plan and found it "exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago."
Krugman continues:
This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.Despite what seem as obvious benefits to those investors intrepid enough to participate, Michael Oneill of The Chicago Tribune reports that the necessary confidence is lacking in investors that Obama and his Treasury Secretary know what they are doing with this bill. The Congress is eroding the already shaky relationship between Obama/Geithner and the investors despite White House assurances that the investors' won't have to open their books to scrutiny. This courtesy isn't going to make the angry taxpayers feel better about the man who offered them Change and Hope.
The risk to the taxpayers is great, as Krugman points out. Mistakes must be prevented. There is only going to be one shot for success, for pressure is mounting to throw Geithner and Dodd onto the peasants' pitchforks. Failure won't be granted time for explanation, nor would there be time to formulate a redo. The Republican National Committee has already released a Web video that slams Dodd and the White House on the bonus cap provision scraped off the stimulus bill at the last minute, and you know that Rush is tuning his foghorn to blast the Democrats for their impending failure — aided and abetted by the Congressional Republicans.
But with the rise of the Internet, spotting GOP crocodile tears is accomplished so much easier. Sam Stein of the Huntington Post reminds us that Bush and the GOP opposed executive compensation caps themselves back when they were in power. Yet hostile public opprobrium never stopped the GOP from scoring political points. Neither did the truth. You know the situation on Wall Street is completely indefensible when BusinessWeek takes up the Red Banner by declaring that "Wall Street's economic crimes go against humanity".
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