TPM pointed me to this excellent short piece from Barry Ritholtz, wherein he notes that new Treasury Secretary Tim Geithner doesn’t seem to understand that he’s no longer working for private interests:
Consider this statement from Geithner, who said that Treasury is considering a “range of options” for its financial rescue plan, with the goal of preserving the private banking system. “We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system.”
No! Defending these idiots was your old gig. In the new job, you no longer work for the cretins responsible for bringing down the global economy. Please stop rationalizing their behavior, and preserving the status quo!
I’ve got a longer post on financial issues percolating, but I think that Josh Marshall might have cut to the quick of my questions earlier today, when he wrote:
The core problem is that many, perhaps most of our major financial institutions are insolvent. They have more liabilities than assets. A functioning financial system requires solvent banks. And only the government has the resources to manage the massive recapitalization to get the key institutions back on their feet. At that level of generality, the issue assumes a degree of clarity.
All the different fix permutations are just different ways of accounting for the transfer of cash. You can take the banks over and assume their debts. Or just give them tons of money to make them whole. Or you can buy their bad investments at the price the banks wish they were worth and thus get the banks out of under the consequences of the financial collapse they helped create.
It’s not clear to me why the dollar amounts spent would really be different in the various permutations. It’s all a question of who owns what when it’s all said and done and who runs the institutions.
The who ought to own it part is pretty clear for me, though I have to admit to being stumped about who ought to run them. Even if you make the very big assumption of competence on the part of the current crop of folks in there, there is such an extreme amount of demonstrated bad faith that I wouldn’t hire them to run a 7-Eleven. However, I suspect if the right tone were clearly set at the top – that we’re done fucking around, and that it’s time to grow up and realize there’s a world outside of your own, to which you have some responsibility – we could find some talent in the financial ranks. But that tone setting? Well, that gets us back to the failure pointed out in the beginning of this post.