Dem Rep. Miller Interview: No 'Change I Can Notice' At Obama's Treasury
As a member of the House Financial Services Committee, Rep. Brad Miller (D-NC) has had a front-row seat for the fireworks over the financial bailout -- and he's not convinced that the new administration has changed the Treasury Department.
"I want change I can believe in," he told me in an interview late yesterday. "I don't think I have change I can notice."
Miller's chagrin over Treasury's lack of responsiveness and transparency signals a distressing trend for the Obama administration. As the nation seethes with anger over lavish spending at bailed-out banks -- particularly AIG's $450 million in bonuses to the same executives who bankrupted the company -- a number of lawmakers from both parties are pointing out that Treasury Secretary Tim Geithner's team could have clamped down on the excess earlier.
And Miller is no gadfly; he has worked with colleagues on predatory lending and mortgage bankruptcy measures that have become top-tier priorities thanks to the financial crisis. He was candid in calling out Geithner for failing to fully inform Congress about his management of the bailout: "I don't feel a lot of confidence in all of this, because I don't have much idea what they're doing ... I'm a fairly conscientious member of the Financial Services Committee, and I haven't found out."
One thing Miller is sure of is that Goldman Sachs, the alma mater of Bush Treasury Secretary Hank Paulson, "had a lot of influence over" the decision to rescue AIG's counterparties (among which Goldman was No. 1).
"I don't want to sound like a right-wing conspiracy theorist who thinks the Trilateral Commission controls the world, but it seems [Goldman] had a lot of influence over this," he said, citing the Obama administration's decision to waive ethics rules to bring in a former Goldman lobbyist as Geithner's chief aide.
Miller was particularly aghast at AIG's suggestion that its Financial Products employees would sue if they were denied their retention bonus payments. "I've been wracking my brain thinking of ways we can sue them," he quipped.
Miller's not alone. After the jump, you can read more skeptical reaction to the Obama administration's sudden -- and likely ineffective -- change of heart on AIG's bonuses.
Rep. Scott Garrett (R-NJ), another senior member of the Financial Services panel, told PBS' "NewsHour" yesterday that Geithner already understood AIG's plans to pay out the bonuses before the flap erupted over the weekend:
So it's only now that it's making headlines that the president is coming back and basically second-guessing his own treasury secretary on this. Why Secretary Geithner didn't raise this when he first understood it is beyond me.
Senate Minority Leader Mitch McConnell (R-KY) expressed similar concerns in a speech this morning, asking why Treasury didn't crack down on AIG's bonuses before offering the company another $30 billion bailout earlier this month:
Over the weekend, we learned the extent of the bonuses being paid to some of the same people at AIG that were responsible for getting them into this mess. Many of us expressed absolute outrage. And yesterday, the White House joined that chorus and promised to do everything possible to get the taxpayer's money back.I appreciate their efforts.
However, it would have been better if this pledge included action two weeks ago when the Treasury agreed to give AIG another $30 billion in taxpayer money. For example, wouldn't the Treasury and the taxpayer have had more leverage over AIG's executive contracts before providing another $30 billion in taxpayer money--rather than allowing the bonuses to be paid with taxpayer money?
Josh
Matt
Eric
Certainly Larry Summers is not change anyone can believe in. Nor is his assistant, Timothy Lightweight Geithner.
Imagining Geithner prevailing in a disagreement with Summers is as plausible as Dubya prevailing over Dickwad Cheney.
March 17, 2009 11:13 AM | Reply | Permalink
I am also tired of all the summers/geithner bashing.
It is impossible to tell at this point how good of a job they are doing. If things still suck this bad 6 months from now - then it is time to judge.
Did they drop the ball on the AIG bonuses? probably. But -as I said in my post below, I would hope their attention is on something more important so I will give them a pass this one time.
I am not saying we shouldn't examine what they are doing but lets be reasonable in our expectations before calling out the lynch mob.
March 17, 2009 11:26 AM | Reply | Permalink
At a rate of only 500,000 more unemployed for each month, giving somebody a 'Friedman Unit' is the same as giving them an extra 3,000,000 more unemployed as well.
I'm not quite so cavalier about the real world costs of policy failures.
JLMG
March 17, 2009 1:03 PM | Reply | Permalink
As one of those unemployed, I am not exactly cavalier about it. I just prefer to get facts before making judgments.
March 17, 2009 4:21 PM | Reply | Permalink
As one of those unemployed, I am not exactly cavalier about it. I just prefer to get facts before making judgments.
Here's a few to get you started.
March 17, 2009 11:32 PM | Reply | Permalink
I pretty much agree that there is an element of "lunch mob" hysteria over the AIG $160M or so "bonuses". Okay, that's a typo, it should be "lynch mob" but I like the allusion to cafe society, too.
I think it is a symptom of "the last straw" effect. People are fed up.
I think it's largely a matter of what people call "optics", or spin management -- it's not the substance, it's how it looks/sounds. Where there's smoke, there's fire ... and we don't always know when people in power are blowing smoke vs. working effectively to put out a real fire.
Obama's team doesn't seem to be doing a great job of spin management on this. That's not necessarily a bad thing, but maybe it's an over reaction to 8 years of immoral and criminal spin management (both on Obama's part and on the part of those caught up in the apparent hysteria). If Obama wants to play it straight, he's in trouble. Optics management is about playing it not straight, by definition. Can Obama afford to ignore basic principles of spin management, for long?
The handling of the AIG "bonus" issues has been clumsy. This could be 1) on purpose, 2) due to inner conflicts in the Admin., 3) dysfunction, 4) ignorance.
It's hard to believe that Obama's team doesn't know about or understand optics. But that doesn't mean that they are good at Presidential spin control. And if Obama wants to tell us the truth, he may shy away from effective spin management. If it's on purpose, we can speculate why Obama would play us that way, even if for our own good.
The AIG "bonuses" aren't really bonuses, they are contracted deals to keep supposedly important people to stay on at AIG (and AIGFP in particular) as AIG goes through a storm. We can question the judgment which dictated that the employment contracts be made in the first place, but it IS a drop in the bucket and there isn't ANY evidence of unethical or unsound conduct the way there is for the BAC/ML bonuses from December which basically got Thain fired and are much larger and more questionable.
We can rant and rave about the AIG "bonuses" but I maintain that it's misguided to do so (tho' I admit it makes an obvious Distraction Target).
Assuming the fluff is not "on purpose": Geithner seems to be a rake puller, not a master garden manager. Maybe he should be a Deputy or Assistant Secretary of the Treasury, a more suitable spot for an otherwise competent technocrat. Or maybe we just need to chill and give Team O some more slack even if pulling on the rope feels like good exercise after too many were slothful for much of 8 years.
March 17, 2009 1:09 PM | Reply | Permalink
The problem as I see it is that a lot of this criticism seems to be not linked to any particular policy or behavior by the Treasury department but just founded in personal hatred of Larry Summers and Tim Geithner. This both, to my mind, cheapens the criticism-- since the bashing of Summers/Geithner started before the Obama administration set foot in the white house, it's never immediately clear whether any particular instance of bashing is a reaction to anything specific that actually happened or just original sin-- but also kind of raises the question of what meaningful goal is being sought here. If people attack the Obama administration for, say, not doing enough to respect the due process rights of military detainees, there's a clear productive goal there, to push the Obama administration in the direction of due process rights for detainees. If people attack the Obama administration for being associated with Tim Geithner then the intended remedy is... what? Fire Tim Geithner? Never mind for a moment whether Tim Geithner ought to have the job he has, does anyone actually think this is something that will happen?
This all goes especially in the case of the kind of reaction we're seeing from Miller here, the Democratic leadership makes halting but positive steps on policy (finally starting to take the executive compensation issue seriously after months of neglecting it) and is the reaction to support or push along those efforts..? No, the reaction is that none of that really matters and attacks on the democratic leadership should be redoubled on the grounds that Tim Geithner something something.
March 17, 2009 1:42 PM | Reply | Permalink
Personal hatred? No. These guys have records, and a lot of it ain't pretty. And people know their records. People like William Black.
Not that Black's likely to know anything about this. I mean, he's only the guy who developed the concept of "control fraud" (look it up), former director of litigation for the Federal Home Loan Bank Board (1984-86), former deputy director of FSLIC (1987), general counsel for Federal Home Loan Bank of SF (1987-89) (where the Keating Five tried to intimidate him and his colleagues into not bringing any enforcement actions against Lincoln Savings), deputy director of the National Commission on Financial Institution Reform, Recovery and Enforcement (1992-93), senior deputy chief counsel of Office of Thrift Supervision (1990-94), and ED of the Institute for Fraud Prevention (2005-07), and author of The Best Way to Rob a Bank is to Own One (University of Texas Press 2005).
March 18, 2009 4:08 PM | Reply | Permalink
Full CV for Black here , btw (PDF).
If you want a recent interview in which he discusses just what he thinks of Geithner, go to
http://green960.com/cc-common/podcast/single_podcast.html?podcast=peterbcollins.xml
and download or listen to the podcast from hour 2 of 03/16/09.
But he's probably just some know-nothing gadfly who's motivated by "personal hatred" of Geithner and Summers.
What you have utterly failed to explain, since you dismiss all criticism with the "personal hatred" trope, is why people with records like these have any business near the economic buttons at Treasury, or any other part of this administration.
March 18, 2009 4:09 PM | Reply | Permalink
I am really tired of this as a topic. AIG is disgusting and when the dust settles, lawsuits for gross negligence are in order and certainly no one who was involved in the default swaps deserves a reward but this is a bunch of hyperventilating and a distraction.
Getting .01% of the entire AIG bailout back isn't going to fix the economy - it won't find people jobs and it won't put a floor under the housing market.
This is a bunch of hot air from politicians. Instead of doing something constructive they are making a bunch of useless noise.
Don't get me wrong, I would be happy to have a public flogging of some of these AIG people in the town square but lets get our priorities straight and focus on the real problem.
March 17, 2009 11:17 AM | Reply | Permalink
I agree with you, for the most part.
Politicians are attempting to score political points, and I can't say that I blame them, given that, on surface, this looks like the completely tonedeaf and outrageous behavior that AIG has already demonstrated.
And it's deeply satisfying to say "Well, let AIG fail!" but I don't think that's a scenario that we really want. The currying of outrage will serve to weaken public support for the Administration plans, and thereby box Obama in more tightly, lowering the probability of success.
I don't want Democrats in lockstep with the President, but I would like them to consider the impact their remarks may have on the media and Republicans.
March 17, 2009 11:34 AM | Reply | Permalink
I'm really getting tired of this "change you can't believe in" criticism of an administration that's been in power for less than 2 months. Even if this was Bush's first term I would think the same thing.
The problems he faces did not happen overnight and they can't be solved overnight. He's going to make mistakes and bad decisions. What should be judged is his ability to recognize his mistakes and efforts to fix them.
March 17, 2009 11:51 AM | Reply | Permalink
The trouble is that Summers and Geithner were two of those bad decisions. He put the foxes in charge of the henhouse.
March 17, 2009 11:59 AM | Reply | Permalink
Again, it's been less than two months. Geithner and Summers were not the sole architects of the collapse of our financial system.
I know what the Left thinks of Geithner and Summers. I'm sure you believe that you could have made better choices. I'm sure you would prefer new faces at the Treasury - actually you all seem to want one person, Paul Krugman. But, the Left also thinks highly of Obama and his decision making skills, doesn't anyone wonder that Obama may have had really good reasons to pick those two? Doesn't it make you wonder about how much trouble we are in that Obama chose - as you say - the foxes to guard the hen house.
I've read many opinions about what Obama should or shouldn't do. I've read pieces that praise him and those that slam him. Since I don't know much about economics, I will trust only the results - which is not going to happen in two months.
March 17, 2009 12:47 PM | Reply | Permalink
Again with this "left" nonsense- chest-thumping heresy-sniffing "moderates" like you need to get their heads out of their asses. A lot of people who are in no way, shape of form "on the left" are well aware of these guys' close Wall Street ties and of Summers's major role in the deregulation that led to this meltdown. This presents both substantive and political problems, and major ones, for Obama.
In case you hadn't noticed (and you can rest assured that even the most moderate Democrats in Congress HAVE noticed), Wall Street is (deservedly) unpopular all across the political spectrum.
March 17, 2009 1:12 PM | Reply | Permalink
Word. Straight out the Bush/GOP playbook, this constant trashing of that Great Satan known as "the Left."
March 18, 2009 12:55 AM | Reply | Permalink
Obama's choices of Geithner and Summers is allowing the GOP -- think of it -- to get to the left of him on this bonus story. And that's where the country is. This has real potential to hurt his efforts down the line. These two jokers are Wall Street through and through, and now, it's biting Obama in the ass. The point isn't that the bonuses are 0.1 percent of the bailout or whatever, it's the principle. When assholes like McConnell and Garrett and Shelby are making the better points, you've got trouble. This looks like flailing ... because it is. Get behind the House bill to tax these bonuses at 100 percent -- TAKE ACTION and quit yakking about it. Very discouraging to say the least.
March 17, 2009 12:05 PM | Reply | Permalink
Okay...I keep asking this question and no one has answered it....how do you expect to tax these bonuses at 100% when the majority of the recipients do not reside in the US?
March 17, 2009 12:20 PM | Reply | Permalink
Not different? So why are all the republicans bitching?
March 17, 2009 12:17 PM | Reply | Permalink
Has anyone ever noticed how Republican members of Congress will never criticize a Republican president, no matter how popular, on the record? And have you noticed how eager Democratic members of Congress are more than eager to do do so?
Sure, that nasty streak of authoritarianism so common among Republicans is a big part of that, but also they grasp that when you're in a congressman or senator of the same party as the President, your personal political fortunes are inseperably bound to the President's.
For as long as I can remember--and as far as I can tell from reading history--Democrats seem utterly impervious to that seemingly self-evident fact. Instead, they just can't stop themselves from sharing their deep-seated conviction that they are far smarter than that boob in the Oval Office with the press, on the record. (And, of course, almost invariably, their belief that they are smarter than the president is almost pathetically obviously untrue.)
March 17, 2009 12:22 PM | Reply | Permalink
True. However, you know what is kind of strange about it is why do we need a "loyal" opposition, when dems are the "loyal" opposition themselves. They don't march in lock step like republicans and point out problems and different proposals and policies themselves. Republicans never do that and aren't doing sh*t now. Maybe that is the lesson at the end of the day. One party rule isn't that bad when its the dems, because they keep the administrations feet to the fire.
March 17, 2009 1:28 PM | Reply | Permalink
AIG's behavior is beyond despicable. I am not ready to condemn the selection of Summers and Gaither - to get at all the levels of corruption within Wall Street insider knowledge can be helpful. There needs to be a bridge between Main Street and Wall Street - not walls. That is going to take time.
March 17, 2009 12:26 PM | Reply | Permalink
That all depends on who those insiders are actually working for. By all evidence so far, it ain't us.
March 17, 2009 1:14 PM | Reply | Permalink
I NEVER tire of saying I TOLD YOU SO
I'm a lawyer
By training and temperament, an a-hole
So sue me
Any third year law student could have told y'all too
Time to move beyond denial and feel the real rage
Because as I said ad nauseum yesterday
There is nothing we can do about the bonuses
Zilch
Nada
Nil
From WaPo:
Not like I haven't represented white collar plaintiffs and defended wrongful termination suits or not drafted several dozen employment contracts or anything but to think believe that these people didn't avail themselves of competent legal advice beggars the imagination
March 17, 2009 1:07 PM | Reply | Permalink
Which makes it all the more politic for Obama to say his administration will do whatever it legally can (i.e. nothing) to prevent these bonuses from being paid out.
March 17, 2009 1:19 PM | Reply | Permalink
I seem to recall candidate Obama promising to "tell the American people what they need to hear not what they want to hear"
Easier said than done eh?
March 17, 2009 2:34 PM | Reply | Permalink
What about this?
http://www.huffingtonpost.com/william-black-tom-ferguson-rob-johnson-walker-todd/how-to-stop-aigs-bonuses_b_175351.html
They seem to have as much expertise as you--if not more.
March 17, 2009 4:03 PM | Reply | Permalink
Do you honestly think AIGFP executives want to be answering questions under oath about what they did to deserve those bonuses?
Also, contracts in service of a criminal enterprise aren't enforceable. And dollars to doughnuts, AIGFP broke some laws.
March 17, 2009 5:07 PM | Reply | Permalink
The Washington Post article this morning also quotes Yale law prof Jonathan Macey
Obama would do well to think twice (even once!) before shelling out another dime to a bank or auto company
Nationalize the banks?
In a pig's eye
March 17, 2009 1:13 PM | Reply | Permalink
Elana,
I've got to say that I am extraordinarily impressed and grateful with the work you've done here and overall with how TPM has tried, to the extent anyone can, to stay on top of this whole financial sector mess. I do think that TPM is really leading the pack again (as it did with the politicization of DOJ) in terms of making sense of all this and sorting it all out.
Thank you to you and to all of your colleagues at TPM!
Keep it up!
March 17, 2009 1:17 PM | Reply | Permalink
the suggestion has been made to tax the income of highly-paid executives, which would solve most of the problems here. For example, tax rate of 80% on all wages + bonuses over $3 million.
March 17, 2009 1:52 PM | Reply | Permalink
Good suggestion but way too low! 99.999999% plus the same rate on all bonuses seems about right to me.
March 17, 2009 2:10 PM | Reply | Permalink
Its a good distraction from the larger outrage that goes back to Clinton.
This disaster stinks to high heaven and hope the President comes clean and stops covering it up.
Put it all out there with the truth and let chips fall where they may.
Oh, heads will roll but this is getting out of control.
March 17, 2009 2:34 PM | Reply | Permalink
Nobody bites you like a blue dog!
March 17, 2009 2:34 PM | Reply | Permalink
This policy of Geithner and Summers, this attachment to the Wall St. culprits, is Obama's kryptonite. It will sap his powers and destroy him; in fact it is already doing so.
Better to sweep out the crowd that caused all this and start over. That is something the country will understand.
March 17, 2009 3:14 PM | Reply | Permalink
I think he kept them to clean up their mess.
It's not looking good for the President.
March 17, 2009 3:32 PM | Reply | Permalink
Some believed that Geithner was selected as the fall guy all along. Possibly, but I would like to hear proof against the guy rather than accusations and assumptions based just on his being from Wall Street.
March 18, 2009 4:17 AM | Reply | Permalink