Roundup

TPMDC Sunday Roundup

Eric Kleefeld | November 1, 2009, 1:04PM

Lieberman Pledges To Filibuster Public Option, Blames Its Supporters For Holding Up Reform
Appearing on Face The Nation, Sen. Joe Lieberman (I-CT) pledged to filibuster against the public option: "The government going into the health insurance business -- I think it's such a mistake that I would use the power I have as a single senator to stop a final vote." He also blamed public option-supporters for being the ones who are obstructing reform: "All of a sudden if you're not for this government health insurance company, you're against health care reform. I'd say to them, 'Don't stop us from getting something good and important done for the American people.'"

Boehner: NY-23 Election Part Of 'Political Rebellion Going On In America'
Appearing on State of the Union, House Minority Leader John Boehner (R-OH) addressed the situation in NY-23 by delcaring, "We're in the middle, I think, of a political rebellion going on in America," and said that the Republicans will work to earn the support of people coming into the political system. At the same time, he insisted that the GOP was not excluding moderates, in light of moderate GOP candidate Dede Scozzafava's withdrawal from the race: "We accept moderates in our party. We want moderates in our party. We cover a wide range of Americans."

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Roundup

TPMDC Morning Roundup

Eric Kleefeld | October 28, 2009, 8:59AM

Kyl Prefers Opt-In Over Opt-Out; Thune Condemns Any Public Plan
The Hill reports Senate Minority Whip Jon Kyl (R-AZ) said he would much prefer an "opt-in" public option for state, over the opt-out model being offered by Democrats. Sen. John Thune (R-SD) expressed surprise at this, as it implies acceptance of a public option at all. "I'd be really surprised if Sen. Kyl votes for anything that includes a government plan," said Thune. "[Democrats] have to come up with a way for this to not look like what it is, but at the end of the day it still is what it is, which is a government plan."

Obama's Day Ahead
President Obama will deliver remarks at an 11 a.m. ET Congressional Gold Medal ceremony, honoring former Sen. Edward Brooke (R-MA), the first black Senator since Reconstruction. Obama will have lunch with Vice President Biden at 12 p.m. ET, and the two of them will host a 1:20 p.m. ET meeting with the co-chairmen of the President's Intelligence Advisory Board and the senior leadership of the intelligence community. At 2:30 p.m. ET, Obama will sign the National Defense Authorization Act for Fiscal Year 2010. Obama and Biden will meet at 3:10 p.m. ET with Secretary of Defense Robert Gates. Obama will attend a commemorative tree planting at 5:30 p.m. ET, and he will deliver remarks at a 6:05 p.m. ET reception, commemorating the enactment of the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act.

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Barack Obama

TPMDC Morning Roundup

Eric Kleefeld | October 8, 2009, 8:59AM

CBO: Budget Deficit Reaches Record $1.4 Trillion
The federal budget deficit for the just-completed fiscal year 2009 reached $1.4 trillion, according to the Congressional Budget Office. This record number was due to multiple factors, including falling tax revenues due to the recession, corporate bailouts and stimulus spending. This was triple the previous record of $459 billion, which was reached last year.

Obama's Day Ahead
President Obama will have lunch at 12 p.m. ET with business leaders. At 2:30 p.m. ET, he will visit the National Naval Medical Center Marine Wounded Warrior basketball game. At 3:15 p.m. ET, Obama and Vice President Biden will meet with Secretary of the Treasury Tim Geithner, and they will meet at 3:30 p.m. ET with Secretary of State Hillary Clinton. At 5 p.m. ET, Obama will play basketball with cabinet secretaries and members of Congress.

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John McCain

TPMDC Sunday Roundup

Eric Kleefeld | August 2, 2009, 1:07PM

McCain: I Respect Palin, Am Saddened By Attacks On Her
Appearing on State of the Union, Sen. John McCain (R-AZ) said he respects Sarah Palin and her decision to resign as Governor of Alaska. "I think she will continue to play a major role in the future of the Republican Party. And I have to respect the decision she made," said McCain, who also added that he is "saddened by the fact that there are still such vicious attacks on her and her family."

McCain: Stimulus Has Had Effect, But Still "Generational Theft"
Also during his State of the Union appearance, Sen. John McCain (R-AZ) conceded that the stimulus program has had some positive effect, though he still does not think it is worth the high price-tag in national debt. "I think it's very clear that the stimulus has had some effect," said McCain. "But, what I worry more than anything about is the long-term effects, because we are committing generational theft."

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Auto Industry

TPMDC Morning Roundup

Eric Kleefeld | June 1, 2009, 9:00AM

GM Declares Bankruptcy; Government To Have Majority Share
General Motors has filed for bankruptcy as part of a government-led reorganization. The federal government will provide an additional $30 billion in aid -- and will have a majority share in the company of 60%. The plan is for GM to emerge from the bankruptcy within 60-90 days with a smaller work force, fewer plants and a reduced number of dealerships.

Obama's Day Ahead
President Obama will be speaking at 11:55 a.m. ET, on the General Motors bankruptcy deal. At 1:20 p.m. ET, he will visit the National Naval Medical Center in Bethesda, Maryland. At 4:45 p.m. ET, he will meet with the National Economic Council staff.

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Bailout

TPMDC Morning Roundup

Eric Kleefeld | April 21, 2009, 9:05AM

Geithner To Face Questions On TARP
Treasury Sec. Tim Geithner will be testifying at 10 a.m. ET today before the Congressional Oversight Panel for the TARP program, where he is expected to face tough questions on the progress of the program -- and regarding a recent report by Inspector General Neil Barofsky criticizing the program for benefitting business and being potentially unfair to the taxpayer.

Obama's Day Ahead
President Obama will meet with King Abdullah of Jordan one-on-one at 10 a.m. ET, and the two will hold an expanded meeting at 10:30 a.m. ET. At 2 p.m. ET, Obama will present the Commander in Chief's trophy to the Naval Academy football team. At 2:45 p.m. ET, he will meet with Ted Kennedy and Bill Clinton to discuss national service, and at 4 p.m. ET he will sign the Edward M. Kennedy Serve America Act into law, at the SEED School in Washington.

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Timothy Geithner

Poll: Geithner's Approval Numbers Just Barely In The Black

Eric Kleefeld | March 30, 2009, 5:39PM

A new Gallup poll finds Americans are closely divided on Tim Geithner's performance, with a large amount of undecideds, as well.

The numbers: Approve 42%, Disapprove 40%. Democrats approve at 61%, Republicans disapprove with 63%, and independents are nearly the same as the overall top-line numbers.

From the pollster's analysis: "It is not a good sign for Geithner, perhaps, that he receives significantly lower approval ratings than does his boss. In the same poll in which Geithner receives 42% approval, Obama receives a 64% approval rating (and a 30% disapproval rating)."

Barack Obama

TPMDC Sunday Roundup

Eric Kleefeld | March 29, 2009, 1:04PM

Obama: Afghanistan Is "America's War"
In his interview on CBS' Face The Nation, President Obama was asked whether the Afghanistan War was now his war. "I think it's America's war," said Obama. "What we want to do is to refocus attention on al Qaeda. We are going to root out their networks, their bases. We are gonna make sure that they cannot attack U.S. citizens, U.S. soil, U.S. interests, and our allies' interests around the world."

Petraeus: "I Wouldn't Necessarily" Agree With Cheney That Obama Is Making Us Less Safe
Appearing on CNN's State of the Union with John King, Gen. David Petraeus was asked his opinion of Dick Cheney's comments that President Obama's decisions were increasing the risk of a terrorist attack. "Well, I wouldn't necessarily agree with that, John. I think that, in fact, there is a good debate going on about the importance of values in all that we do," said Petraeus, outlining his own opposition to torture.

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Bailout

The Government Wants Your Take on Geithner's New Bank Plan

Elana Schor | March 26, 2009, 2:47PM

Nouriel Roubini has weighed in. So have Simon Johnson, Brad DeLong, and Paul Krugman.

Now you, the taxpayers, are being asked for your comments on the government's new bank rescue plan -- not by the Treasury Department, but by the FDIC. Are you disturbed by the re-branding of toxic mortgage-backed securities as "legacy assets"? Are you ready to get past this bonuses business and put your trust in the Obama administration? Here's the link to submit your reaction in detail.

The full release on the public comment period is posted after the jump.

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Timothy Geithner

Is Geithner Plan Soft on Future Madoffs?

Brian Beutler | March 26, 2009, 12:08PM

Earlier in the hearing (i.e. before the Bachus query), Geithner had an interesting exchange with Rep. Keith Ellison (D-MN) about what regulatory requirements the Geithner plan would impose on Hedge funds.

Ellison: Could you discuss in greater detail how a capital adequacy regime would work for [hedge funds]?

Geithner: We did not propose to establish capital requirements for hedge funds. What we are saying, though, is that the large institutions, principally the banks and the major large complex regulated financial institutions, are held to a set of requirements on capital, liquidity, reserves, risk management, that are commensurate with the risk they pose. And because their risks are greater and because the consequences of their failure is greater they need to be subject to a higher set of standards and greater constraints on leverage. But we're not proposing to establish cap requirements for the broad universe of hedge funds and private pools of capital that exist in our markets. We want them to register with the SEC if they reach a certain scale and in the future if some of them individually reach a size where they may be systemic, then at that point we believe they should be brought within a regulatory framework that's similar to that which exists for banks.

There were obviously a lot of reasons Bernie Madoff got away with his Ponzi scheme for as long as he did. But it's probably fair to say that if he'd been held to hard capital requirements he'd have had a harder time getting his scheme off the ground, or his jig would likely have been up much more quickly.

Video shortly.

Bailout

Bachus: AIG Stiffed Small U.S. Institutions, While Paying Off Foreign Banks in Full

Brian Beutler | March 26, 2009, 11:42AM

Rep. Spencer Bachus (R-AL) just raised a new objection to the AIG counterparty payments--specifically that while AIG used government money to pay off their CDS obligations dollar-for-dollar to major (sometimes foreign) financial institutions, it repaid smaller U.S. institutions that made secured loans to AIG subsidiaries at a rate of only about 20 to 30 cents on the dollar.

Video forthcoming, but Geithner had no immediate answer to the query, which, to amateur ears anyhow, sounds like an interesting one. We'll follow up.

Late Update:

Timothy Geithner

Geithner Back Before the Firing Squad

Brian Beutler | March 26, 2009, 10:44AM

Treasury Secretary Timothy Geithner is back before the House Financial Services committee today to argue the case for greater federal regulatory power over non-bank financial institutions. In many members' minds, though, he's still on the line for the AIG bonus flap and for allowing bad financial actors to take too big a role in shaping bailout policy.

The outline of the Treasury's new regulatory reform framework is here. We'll keep a close eye on his testimony.

Barack Obama

TPMDC Morning Roundup

Eric Kleefeld | March 26, 2009, 9:01AM

Dem Ad Promotes Obama Budget, Door To Door Campaign
The DNC and Organizing For America have released this new TV ad promoting President Obama's budget plan:

Interestingly, the ad focuses on OFA's recent door to door canvassing efforts to sign up supporters for the budget, utilizing the same grassroots appeal in government as Obama used on the campaign trail. The ad will run on national cable and in the D.C. media market -- essentially aimed at the political class and higher-information voters.

Obama Holding Online Town Hall Today
President Obama is holding a live "Open for Questions" online town hall at 11:30 a.m. today, focused on the economy. The White House will be taking questions here, but submissions and voting close at 9:30 a.m. ET -- so if you want to pitch something, now is your chance.

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Bailout

Who Pays For Government Power Over The Next AIG? Geithner Could Leave That to Congress

Elana Schor | March 25, 2009, 2:44PM

Treasury Secretary Tim Geithner will be back before the House Financial Services Committee tomorrow to outline his plea for emergency powers to take over and wind down foundering non-bank financial firms -- but he may leave unanswered the question of how to fund his plan.

Early leaks of Geithner's request, which is slated to head to Capitol Hill in draft form later today, suggest that the emergency "resolution authority" would be paid for either by a mandatory congressional appropriation or by charging the private companies covered by the change.

The latter of those two options could be a non-starter with the financial industry, which is unlikely to welcome a new government fee, while the former could face resistance from members of Congress who would prefer to use the FDIC's deposit insurance fund (reliant on payments from banks) as a model. Either way, as the WSJ reports, we know two things for sure:

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Bailout

Geithner Answers His Critics: Putting Toxic Assets on Uncle Sam's Balance Sheet Would be Riskier

Elana Schor | March 25, 2009, 11:55AM

During his appearance today at the Council on Foreign Relations, Treasury Secretary Tim Geithner was asked the question on many progressives' minds: Why does the Obama administration's bank rescue plan seem to rely on "socializ[ing] risk but keep[ing] profits private?"

But Geithner seemed to sidestep the question at least in part by offering a explanation for why he decided against setting up a "bad bank" -- not directly addressing the option of nationalizaton or receivership. The full exchange is posted after the jump.

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Bailout

House to Take Up New Executive Pay Bill With Added Limits to Geithner's Power

Elana Schor | March 25, 2009, 10:18AM

The AIG-inspired plan to tax bonuses at bailed-out firms is stalling quickly in the Senate, but the House Financial Services Committee is pressing ahead today by taking up a bill that would freeze existing bonus contracts and require the Treasury Department to produce its own executive-pay standards.

But the measure, sponsored by Reps. Alan Grayson (D-FL) and Jim Himes (D-CT), doesn't leave the thorny decision on appropriate Wall Street pay to the Treasury alone. After Secretary Tim Geithner makes the call on what constitutes "excessive" compensation, the bill would require him to secure the approval of other financial regulatory agencies.

The House bill's limit on Geithner's ability to control the pay standards is admittedly slight, but it reflects a growing shift in the capital away from consolidating power in the hands of Treasury and the Federal Reserve.

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Timothy Geithner

Geithner Squirms About Bonuses

Brian Beutler | March 24, 2009, 1:31PM

Frustrated by the recent bonus bonanza Rep. Brad Sherman (D-Calif.) asks for a chart of bonus statistics for all TARP recipients. Geithner demurs. Check it out.

Timothy Geithner

Geithner: We Don't Need No Stinkin' Contingencies

Brian Beutler | March 24, 2009, 1:19PM

Moments ago, Secretary Geithner artfully dodged a question that's on everybody's mind: What happens if his plan fails. Echoing the architects and supporters of the success-bonanza that is the Iraq war, Geithner said that the only thing we need to ensure the plan works is sufficient will.

Bailout

Goldman Sachs Could Play Huge Role in Geithner's Plan

Brian Beutler | March 24, 2009, 12:35PM

Earlier in the hearing, Tim Geithner suggested that Goldman Sachs could be one of five institutions helping to manage the public-private partnership program to buy up a bunch of toxic legacy assets from ailing banks.

Goldman has played a central role in this drama. As an institution, it's been extremely close to the Treasury department. And, as Josh noted, it's also about to pay off all of its TARP money (with the help, perhaps, of the other government money it received as an AIG counterparty) which will free it up to return to a status quo of paying enormous bonuses.

It's also, of course, one of the institutions that helped bring the financial system to its knees--it holds many of the toxic assets in question and may be well placed to bid them up and inflate their prices at auction. (How you manage the fund to rescue financial institutions with toxic assets while you yourself hold those same assets has yet to be sussed out by committee members.)

Anyhow, in the event that you're feeling left out and want a piece of the Goldman pie for yourself, you can apply with the government to be a private asset manager here.

Democrats

House Dem Leader Cool to Emergency Powers for Geithner

Elana Schor | March 24, 2009, 12:28PM

As Brian observed earlier, the big story of this morning's testimony from Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke was their request for broad governmental powers to seize non-bank financial institutions -- effectively paving the way for receivership in case another AIG-sized firm heads for collapse. But House Majority Leader Steny Hoyer (D-MD) isn't prepared to hand over those powers to Treasury without getting more questions answered.

At his weekly briefing with reporters, Hoyer was notably cool to the idea of handing Geithner takeover powers without greater congressional oversight:

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Timothy Geithner

Did Bernanke Know About the Bonuses Two Weeks, or Three Months Ago?

Brian Beutler | March 24, 2009, 12:09PM

After news of the AIG bonuses broke, Geithner held to the line that they didn't know about the payments until March 10, just a little while before you and I did. And, lo and behold that's what Bernanke is saying now:

Bernanke: I knew that there were general compensation packages throughout the company. I did not know, I was not informed about the specific payments to AIGFP.

Garrett: If you had that information would that have been germane to your discussions?

Bernanke: It would have given us more time to talk, negotiate, and look for options, but frankly we still would have faced the same legal obstacles we are currently facing.

But AIG CEO Edward Liddy greenlighted a round of bonuses of some sort on September 18, at a time when both men were already deeply involved in AIG, and last week he said that Bernanke had known about the payments for three months.

Late Update: Video embedded above.

Timothy Geithner

Bernanke Argues For Emergency Federal Power Over Major Non-Bank Financial Institutions

Brian Beutler | March 24, 2009, 11:09AM

In his opening statement, Fed Chairman Ben Bernanke made the case for legislation--soon to be introduced by the administration on the hill--that would create guidelines and authority for the government to take non-bank financial institutions (like, say, Lehman Bros. and AIG) into conservatorship or receivership. Bernanke said:

The decision by the Federal Reserve on September 16, 2008, with the full support of the Treasury, to lend up to $85 billion to AIG should be viewed with this background in mind. At that time, no federal entity could provide capital to stabilize AIG and no federal or state entity outside of a bankruptcy court could wind down AIG. Unfortunately, federal bankruptcy laws do not sufficiently protect the public's strong interest in ensuring the orderly resolution of nondepository financial institutions when a failure would pose substantial systemic risks, which is why I have called on the Congress to develop new emergency resolution procedures. However, the Federal Reserve did have the authority to lend on a fully secured basis, consistent with our emergency lending authority provided by the Congress and our responsibility as central bank to maintain financial stability. We took as collateral for our loan AIG's pledge of a substantial portion of its assets, including its ownership interests in its domestic and foreign insurance subsidiaries. This decision bought time for subsequent actions by the Congress, the Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve that have avoided further failures of systemically important institutions and have supported improvements in key credit markets.

Geithner said much the same in his own opening statement. That's the line from the administration. What this means for AIG, but also existing banks and other financial institutions is still an open question. Let's see if Geithner or Bernanke or William C. Dudley (President and Chief Executive Officer of the New York Fed, also testifying) tip their hands.

Bailout

Geithner and Bernanke Face the Furies

Brian Beutler | March 24, 2009, 10:46AM

Treasury Secretary Timothy Geithner and Fed Chairman Ben Bernanke are testifying before the House Financial Services committee as you read this. We'll be following today's hearing pretty closely, both because we (ahem) value your readership, but also because the hearing's shaping up to be much more interesting than originally anticipated.

Two big stories broke yesterday, both of which Josh wrote about over at the mother ship. Suddenly there's much more at stake than the question of when Geithner knew about the AIG bonuses. There's now also the questions of the extent to which the administration has handed over the shaping of bailout possibility to the bad financial actors themselves, and of the possibility that the administration will seek extraordinary power going forward to seize distressed non-bank financial institutions like hedge funds and investment firms. That could have huge ramifications for the government's power over regular banks, which often own such institutions, and, depending on the scope of the legislation, for much smaller institutions as well.

Stay tuned.

Timothy Geithner

Poll: Geithner's Numbers Not Great -- But Not Awful, Either

Eric Kleefeld | March 24, 2009, 10:06AM

The new CBS poll shows how Tim Geithner's public image has held up in the face of some really bad press coverage. Overall, his numbers aren't great -- but they're not nearly as bad as you might expect:

How much confidence do you have in Treasury Secretary Tim Geithner's ability to handle the nation's financial crisis - a lot, some, not much, or none at all?

A lot 13%
Some 41%
Not much 20%
None at all 15%

So a 54% majority of respondents have some level of confidence in Geithner, but it's hardly an emphatic vote of support.

As is to expected, Democrats are the most confident, Republicans the least confident, and independents correspond closely to the top-line numbers.

Bailout

Shocker: Media Let Wall Street Chieftain Praise His Own Idea

Elana Schor | March 24, 2009, 9:28AM

In today's flurry of positive press about the stock market's 7% uptick in response to Treasury Secretary Tim Geithner's bank rescue plan, one name stands out: Bill Gross, chairman of the vast PIMCO bond fund.

Bloomberg, Time magazine, the Financial Times, and other outlets all picked up Gross' punchy declaration that the Geithner plan is "win-win-win." Reuters even touted as an "exclusive" its report that Pimco would be participating in Geithner's public-private initiative to buy up toxic mortgage-backed assets.

There's only one problem with this: Gross is practically duty-bound to love the plan, since it was partly his idea. As the WaPo reported on Sunday: (emphasis mine)

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Bailout

Congressional Reaction to Geithner's Bank Plan: The Good, the Bad, & the 'Maybe'

Elana Schor | March 23, 2009, 5:51PM

We know that Wall Street is warming to Treasury Secretary Tim Geithner's new plan to encourage private sector purchases of toxic assets -- but what does Congress think?

Only a few senior lawmakers have emerged today to weigh in on Geithner's proposal, suggesting that Congress knows it can inspire market fluctuations using nothing but candid commentary on the financial crisis. But here's how the measured reaction from the Hill shook out.

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Timothy Geithner

Geithner's Bank Plan: Bringing Eric Cantor Closer to Paul Krugman

Elana Schor | March 23, 2009, 2:51PM

House Minority Whip Eric Cantor (R-VA) has just released his official reaction to the Treasury Department's new toxic-asset-purchasing plan. And in an illustration of the GOP's sudden populist shift, Cantor attacked the proposal as a giveaway to big business:

As described, the plan seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer. In its current form, Secretary Geithner's plan is a shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it. Six months after Congress debated the first TARP, it is inexcusable that taxpayers still have not been told their true exposure.

Disturbingly enough, Cantor's criticism of the Treasury plan echoes that of Paul Krugman, who wrote this morning:

The only way to argue that the subsidy is small is to claim that there's very little chance that assets purchased under the scheme will lose as much as 15 percent of their purchase price. Given what's happened over the past 2 years, is that a reasonable assertion?

Now, Cantor's party has yet to emerge with any coherent alternative to the Obama administration's plan -- and the GOP certainly isn't embracing anything like Krugman's pitch for greater government involvement in winding down truly insolvent banks. But when a leading conservative politician and a leading progressive economist are sending the same signals, it's safe to say that the day has taken a turn for the Carroll-esque.

Late Update: A GOP source emails to note that House Republicans did offer a plan of their own to right the markets. In September, Cantor proposed an insurance fund that would charge banks a premium in exchange for guaranteeing toxic mortgage-backed securities.

I'm certainly aware of that concept, but would argue that it's far from a viable alternative to Geithner's current tack. Time economics columnist Justin Fox explained at the time that insuring toxic assets would have the same risk of inadvertent subsidy that Cantor decried today, because setting premium levels for the banks would still require setting (likely inflated) prices for the securities being insured.

The Times also cited Cantor as admitting that the GOP plan "could only work in conjunction with a direct purchase of troubled debt by the Treasury" -- a situation in which government would be playing the same role that Geithner envisions the private sector at least partially playing. So my reference to the lack of a "coherent alternative" included the mortgage-backed-securities insurance idea.

Timothy Geithner

The Real Policy Consequence of the AIG Bonus Backlash

Elana Schor | March 23, 2009, 1:10PM

In the aftermath of the AIG bonus scandal, most media outlets are focusing on Congress' resistance to any more requests for bailout money from President Obama. But the nation's newfound populism is forcing another political sea change on Washington: the push to turn the Federal Reserve into the next financial super-regulator, which I wrote about on Friday, is losing steam fast.

Here's what we know so far ... Congress plans to take up a dense and politically charged reform of financial rules later this year, and among the biggest questions is which agency should become the overall "systemic risk regulator" for Wall Street and the banks.

House Financial Services Committee Chairman Barney Frank (D-MA) has said in no uncertain terms that the Federal Reserve should have the job, but Senate Banking Committee Chairman Chris Dodd (D-CT) has long doubted whether the Fed is up to the task given its mishandling of the government's AIG bailout.

What remains unknown is whether Treasury Secretary Tim Geithner and White House economic adviser Larry Summers -- the former a Fed veteran and the latter a possible Fed-chairman-in-waiting -- also agree that the Fed should become the super-regulator. Reuters reported earlier this month that Geithner would "likely" suggest expanding the Fed's powers, but the AIG bonus scandal has severely eroded support for that move in Congress.

Even Frank is cooling to the idea he once embraced, as Bloomberg noted over the weekend:

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Barack Obama

TPMDC Morning Roundup

Eric Kleefeld | March 23, 2009, 9:01AM

Geithner Unveiling New Bank Plan
Treasury Secretary Tim Geithner is rolling out the new bank rescue plan today, with a new op-ed piece in the Wall St. Journal explaining the workings of the Public-Private Investment Program, which involves the government partnering with private investors to purchase between $500 billion and $1 trillion in assets that are now clogging up the financial system. "Our approach shares risk with the private sector," Geithner writes, "efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets."

Obama's Day Ahead
President Obama and Vice President Biden will be receiving their economic daily briefing at 11:15 a.m. ET, accompanied by a media pool spray, with Treasury Secretary Tim Geithner, FDIC Chairwoman Sheila Bair, and Federal Reserve Chairman Ben Bernanke. Obama will also be speaking at 12:30 p.m. ET from the Eisenhower Executive Office Building, delivering remarks on clean energy and proposed investments in new technology included in his budget plan.

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Timothy Geithner

Dodd Raps Treasury For Letting Him Take the Fall on Executive Pay

Elana Schor | March 20, 2009, 1:40PM

Sen. Chris Dodd (D-CT) just spoke to home-state voters about his sudden emergence as the scapegoat for the watering-down of his executive pay amendment to the stimulus bill -- and the Banking Committee chairman was openly angry with the Treasury Department for not owning up to its role in the flap earlier this week.

Dodd defended his role in ensuring that Wall Street compensation limits made it into the stimulus. The senator expressed disappointment that Treasury let him twist in the wind until yesterday evening, when Secretary Tim Geithner admitted that officials from his department requested that Dodd's amendment be changed to grandfather in existing bonus contracts.

We'll have the video of Dodd's comments for you soon, but here's his key quote:

I wouldn't go around and change my own amendment within days of that if I didn't think it was merely technical in nature.

And so I'm angry about it and angry that, in a sense, I've been held up as sort of responsible for all of this, when, in fact, I responded to what I thought was a reasonable request at the time [from Treasury] ... it turned out to be far more than that.

But this back-and-forth over the executive pay amendment isn't the only issue that could put Dodd at odds with Geithner and White House economic adviser Larry Summers.

As I mentioned earlier today, Dodd has been openly skeptical of consolidating future financial regulatory power at the Federal Reserve, preferring to run broader regulation out of the FDIC -- and that position may not sit well with Geithner, the former head of the New York Fed, as well as Summers, who is widely tipped to be the next Fed chairman.

Late Update: Here's the video of Dodd.

Executive Compensation

Geithner Confirms Treasury Asked Dodd For Bonuses Loophole

Elana Schor | March 19, 2009, 3:55PM

Treasury Secretary Tim Geithner has confirmed that his department did press Sen. Chris Dodd (D-CT) to water down the executive-bonus limits included in last month's stimulus bill, delivering a boost to the beleaguered Dodd -- but at a greater potential cost to his own damaged credibility on Capitol Hill.

In an interview set to air later today on CNN, Geithner took "full responsibility for the situation" and said "calls for resignation are part of the job," according to an early report on the network's website.

Late Update: The full exchange between CNN's Ali Velshi and Geithner is posted after the jump. It's notable how rapidly the media has become fixated on this change to the Dodd amendment ... considering that most mainstream news outlets were fudging the truth on it just days after it became law.

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Bailout

House Dems Find 13 Bailout Recipients Owe Back Taxes -- After Telling Treasury They Didn't

Elana Schor | March 19, 2009, 11:02AM

Just when you thought it was impossible to find more proof of the bungling of the bailout ... Rep. John Lewis (D-GA), chairman of the House Ways and Means oversight subcommittee, announced this morning that his panel had found 13 of the top 23 recipients of TARP owing the government $220 million in back taxes.

Making matters worse was the fact that any company getting TARP aid had to certify to the Treasury Department that they didn't owe back taxes before getting their share of the bailout, as Lewis explained. It appears that Treasury took the bailed-out businesses at their word rather than asking to actually see their tax records.

If there's any doubt remaining that Congress would not approve any more spending on the financial rescue, Lewis' opening statement this morning should put it to rest:

Taxpayers have no sense that there is any control over this money. They have no idea what, if anything, they will get in return. This entire program is based on trust - trust in the givers and trust in the takers. At this point, there is no trust.

To get money from Treasury, banks and others must sign a contract that states they have no material unpaid Federal taxes. Treasury did not ask these banks and companies to turn over their tax records. Treasury relied on the signed statements when it agreed to invest billions of taxpayer dollars. When you or I go to the bank to take out a mortgage to buy a house, we are asked for our tax returns. They're not going to just take our word for it, and we are not asking for millions of dollars.

The Subcommittee looked at the top 23 TARP recipients. We found that thirteen of them owed more than $220 million in unpaid Federal taxes. Two companies owe over $100 million each. How can this be? If we looked at all 470 recipients, how much would they owe?

Are they signing contracts knowing that they owe taxes but thinking they will not get caught? Did then-Secretary Paulson turn a blind eye? Either way, this is shameful. It is a disgrace. The American people are fed up, they are fired up, and they're not going to take it anymore. As members of Congress, we shouldn't take it anymore either.

Timothy Geithner

Report: Treasury Knew About AIG Bonuses Earlier Than Obama Administration Claims

Elana Schor | March 18, 2009, 6:07PM

AIG CEO Edward Liddy told the House Financial Services Committee today that the Federal Reserve had okayed his company's planned bonuses in advance -- and now Time magazine reports that the Treasury Department also knew about the ticking political time-bomb earlier than it has acknowledged.

As the magazine reports:

"Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming," a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, "Everybody knew that [AIG] had a retention issue."

When the debate comes down to a Nixon-style "what did he know and when did he know it," things aren't looking good. And we may have just reached that point for Treasury Secretary Tim Geithner.

Timothy Geithner

GOPers Call For Geithner's Head, While (Some) Dems Say Hold the Pitchforks

Elana Schor | March 18, 2009, 6:01PM

Racked by negative coverage of its new chairman and its de facto talk-radio leader, the GOP is in need of a cause to rally around -- and it's found one in the storm of public anger over AIG.

Rep. Connie Mack (FL) today became the first Republican to call for Treasury Secretary Tim Geithner's resignation over the AIG bonuses controversy, a call quickly seconded by Rep. Darrell Issa (R-CA). House Minority Leader John Boehner (R-OH) took the middle ground by warning ominously that Geithner is "on thin ice."

Of course, Republican outrage at Geithner is to be expected. It's the lukewarm support coming from Democrats that should most concern the Obama administration.

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House of Representatives

House Republicans To Force Geithner's Hand on AIG Negotiations

Elana Schor | March 17, 2009, 5:08PM

Have you been wondering whether Treasury Secretary Tim Geithner is leaving some key details out in the chronology of his negotiations with AIG CEO Edward Liddy?

Since Geithner knew about Liddy's plans to pay out the company's now-infamous bonuses before they became public on Saturday -- and since the bonuses have been common knowledge in the media for months -- it's worth asking how directly Treasury was involved in okaying the payouts.

But it's too bad for Democrats that Republicans are the ones seeking the information.

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Barack Obama

Senators to Geithner: You Could Have Backed Our Bonus Reforms

Elana Schor | March 17, 2009, 2:50PM

Washington can have a woefully short memory. But Sens. Ron Wyden (D-OR) and Olympia Snowe (R-ME) remember what TPMDC reported on just last month: their proposal to force bailed-out companies to rescind executive bonuses could have made it into the stimulus bill, but was stripped out by Democratic leaders at the last minute.

Wyden and Snowe are now asking Treasury Secretary Tim Geithner to support their bailout bonuses measure, which could have prevented much of the current AIG flap and was scored as a money-maker for the U.S. government.

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Bailout

Liddy's Not Getting Those AIG Bonuses ... But His Fellow Senior Execs Are

Elana Schor | March 16, 2009, 12:03PM

When reporting on AIG's bonus payments and the resulting political backlash, it's easy to get bogged down in numbers without seeing the full picture. So here are some points to keep in mind.

AIG CEO Edward Liddy has already agreed to take a $1 salary for 2008 and 2009, and he isn't in line for any of the $1 billion in total retention bonuses that are at issue this week -- $450 million of which is slated to go to the company's disgraced Financial Products unit.

But it's important to distinguish retention bonuses from plain ol' bonuses, because senior AIG executives certainly do. In a December 5 letter to Rep. Elijah Cummings (D-MD), Liddy said that five of the company's seven most senior executives (called the Leadership Group) "will not receive annual bonuses for 2008 or salary increases through 2009."

Yet Cummings himself had first called Liddy's attention to a November filing from AIG that said senior executives had agreed to delay payments of their retention bonuses, the money that's being paid out this week in defiance of the Obama administration. Among the AIG execs receiving retention payments are two members of the same Leadership Group that had pledged to forgo its bonuses: Chief Financial Officer David Herzog and Executive Vice President of Retirement Services Jay Wintrob.

So to be clear, these executives are getting paid this month ... while continuing to tout their willingness to give up other bonus payments. There's no stronger argument for seeking to reclaim the money without negotiating with Liddy, as the Obama administration had been previously attempting to do.

Late Update: To shed some more light on the retention bonuses being paid out this week, they're different from the ordinary annual bonuses that most companies give. The retention payments were negotiated early last year, according to AIG, with the goal of retaining key executives and preventing them from decamping to competing firms.

The focus on retention bonuses explains some of the weirdly out-of-touch rhetoric in Liddy's Saturday letter to Tim Geithner, where he argues that keeping the "best and the brightest" talent at AIG would be impossible if the government actually used its power to limit executive compensation.

Barack Obama

GOPer: Critics of Senate's Vetting of Obama Nominees Are Cowards

Elana Schor | March 13, 2009, 12:55PM

Tim Geithner. Tom Daschle. Ron Kirk. What do these men have in common, other than their nominations to join the Obama administration?

Each man owed back taxes to the U.S. government that became an issue during their confirmations -- in Daschle's case, the debts were enough to derail his bid -- and each man had their missteps unmasked by the Senate Finance Committee.

The Politico reported earlier this week that the Finance panel's rigorous vetting was being supervised by Mary Baker, an IRS tax investigator doing a stint in the Senate. In that story, one anonymous "tax expert" quoted by the newspaper accused the committee of "going a bit overboard" with tax inquiries that are "detailed to the point of being silly."

And that anonymous dissing didn't sit well with Sen. Chuck Grassley (IA), the senior Republican on Finance. In a little-noticed statement released late yesterday, Grassley teed off on the "cowardly approach" taken by critics of his committee's Obama-nominee vetting:

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Bailout

Geithner: Government Couldn't Prevent Another AIG

Elana Schor | March 12, 2009, 1:36PM

Treasury Secretary Tim Geithner, winding down his testimony before the Senate Budget Committee today, was asked a simple question by Sen. Ron Wyden (D-OR): Does the government have the legal authority to prevent another company from imploding on the same monumental level as AIG?

Geithner's simple answer was "no."

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