Geithner must go

Please, President Obama, fire Timothy Geithner today and hire a treasury secretary to fight for the U.S. economy as hard as Geithner fights to protect bankers’ profits.

I know you’re intensely loyal to Geithner and have resisted such calls in the past.

But Mr. President, times and circumstances have changed. For your own good and especially for the good of the country, you should reconsider. You’re in an especially close election and you need to cut yourself loose from the failed policies you’ve pursued for the past four years that have coddled the financial sector at the expense of the rest of the economy.

Your loyalties are with Geithner but his, Mr. President, are with the too big to fail banks, not with the public.

The most recent evidence comes from this Huffington Reports piece which details how Geithner, while president of the New York Fed responded when he heard about the big banks manipulating a key interest rate known as LIBOR when he was chair of the New York Federal Reserve in 2007.

Recently disclosed emails show that while Geithner expressed concerns over the integrity of the LIBOR, or London Interbank Offered Rate, he did little to investigate or stop the manipulation.

What he did to was cut and paste the bankers’ own proposals into his own proposal to the Bank of England about how to address the LIBOR concerns. It should have been an early warning sign of how Geithner and his big bank cronies spoke with one voice – theirs.

The public may not understand just how critical the integrity of LIBOR is, but you do, Mr. President. You know that it’s how it’s used as a benchmark for trillions worth of transactions every day, on everything from complex credit default swaps to credit cards.

You also shouldn’t underestimate the public’s ability to grasp what’s at the root of this LIBOR scandal, which is the same theme that’s underlying JP Morgan London Whale trading losses – that bankers have been manipulating the financial system for their own interests, with your administration either fully cooperating or looking the other way.

Don’t underestimate the ability of the ruthless and hypocritical Republican attack machine to clobber you with those policies even as the Republicans embrace more banker-friendly policies than you are.

They’ll get a good shot this week when Geithner testifies before the House Banking Committee over what he knew and what he did about banks.

The public may not be focused on the LIBOR in the middle of a hot summer, Mr. President, But the scandal is just beginning to wash up on the our shores after causing tremendous damage after it erupted in England, after Barclays Bank acknowledged its own LIBOR manipulation and cut a deal with regulators. Meanwhile the investigation into 16 U.S. banks and their LIBOR shenanigans is just getting cooking.  It could be heating up at the same time as the presidential race.

Mr. President, you have another opportunity to do something that is good politics and good for the country too, and will distinguish your policy on the banks from your opponent’s do-nothing approach.

Get rid of Geithner and begin to chart a new course toward a system not rigged in favor of big bankers and their fat bonuses. We need a treasury secretary who doesn’t measure prosperity solely by the size of bankers’ wealth.

Money Never Sleeps

Oliver Stone’s sequel to his 1984 hit "Wall Street" opens as the Bubble is about to burst on a culture of material excess that makes Gordon Gekko’s 1980s cell phone – then a symbol of extravagance available only to the mega-rich – ridiculously quaint. Stone’s Wall Street circa 2008 is set in a New York constructed of light, with ubiquitous flat screens providing instantaneous, 24/7 updates on the status of global power and wealth. When the results of decades of speculation first hit the housing market and then the stock markets, the great titans of Wall Street start eating their own. But that was only an appetizer for the main course: the American taxpayer.

I really couldn’t enjoy the love story between Shia LaBeouf and money, much less the one between Shia and his girlfriend, who happens to be Gekko’s estranged daughter and thus presents a trading opportunity for the ambitious young man. As the movie traced the collapse of Bear Stearns and then the stock market into a pile of scrap paper, I got more and more angry.

In one scene, the silver-haired heads of the giant firms that run Wall Street – surrogates for Goldman Sachs, JP Morgan, Citigroup, etc. – cloaked in bespoke suits, are gathered around an ornate table in a wood-paneled conference room with one of their former colleagues, who is now the Secretary of Treasury (aka Hank Paulson), to discuss how much taxpayer money they need in order to stay afloat. Hundreds of billions of dollars are referred to in single digits. The consensus, quickly obtained, was “seven.” It was like the Godfather movies, when the heads of the Families would convene to handle some event that threatened their criminal way of life.

I found myself remembering the scene, in the third Godfather, when small-time hood Joey Zasa locked the conference room doors from the outside, trapping the heads of the Families inside so they could be slaughtered by his assasins.

The nation hardly needs Oliver Stone’s portrayal of the markets as organized crime to stoke people’s recollection of what the debacle did to our economy and our kids’ futures. Our anger has reached a white hot point that, like the sun in a magnifying glass, is now being directed against public officials all over the country. “Money never sleeps” is Gordon Gekko’s new mantra, and vast sums of money are flowing into the political process to influence the November elections - largely an attack on incumbent Democrats in Congress.

But where was all this money back in the third week of September, 2008, when the Bush Administration’s three page proposal to bail out Wall Street with billions in taxpayer money was presented to Congress along with the threat that the United States would collapse if it wasn’t approved on the spot?

In what I must acknowledge was a serious overestimation of the impact one citizen could have at such a moment, I flew to Washington, D.C. on Tuesday, September 23, 2008, thinking I might be able to draw someone’s attention to the sheer lunacy of what was being proposed. Joan Claybrook, the President of Public Citizen, and I held a news conference just outside the House Banking Committee hearing room, where the plan was being presented by the Bush Administration. We were like two voices whispering in a hurricane. Later, I met with members of the California congressional delegation who were in shock and ready to do the bailout deed forthwith. Ok, I said, at least require disclosure of how our money was spent and a quid pro quo: that the companies receiving taxpayer dollars could not loan them back to us for more than a few percentage points profit. The legislators responded to the interest rate cap as if I had proposed that they resign from Congress.

It would have been nice back then if there had been a hugely funded campaign backed by angry Americans telling Congress not to act hastily or stupidly. But in fact, the big money we are seeing now in American politics is not from the grassroots, but from the same greedy folks who caused the debacle in the first place or who profited from the bailout. According to US News and World Report, business and conservative backed organizations are behind the  “independent expenditure” campaigns that are targeting Democrats and outspending them two to one. A recent article in the New Yorker uncovered two extremist billionaire brothers funneling over $100 million from their family oil business into Tea Party non-profits. Long-time big business Republican operatives like Karl Rove (now running a group called "American Crossroads") and Dick Armey ("FreedomWorks") are supplying more than tea for the new tea party.

The sudden resurgence of interest in politics on Main Street would be cause for great celebration, and the opportunity for real change, as citizen leader Jamie Court writes in his new primer on political activism: “The Progressive’s Guide To Raising Hell.” Instead, it’s just another dismaying example of big money corrupting our political system. If it succeeds, get ready for more speculation, more bubbles, and more pain for the average American.

"Greed is good," Gekko said back in the day, but Wall Street needs to own Washington, and Wall Street is already projecting victory in November.  Commenting on the rise of the Dow in September, an analyst said, "’There is a good chance that the strength we have seen in the market recently is due partly to an expectation about the result of the election... Investors are starting to understand that a likely result of this election is gridlock, and that is good."

Too Big To Get Sick: Vaccine for the Swine

If they are “too big to fail” then they are obviously “too big to get sick.” Guess that’s why Goldman Sachs, Citigroup, and JP Morgan Chase are getting doses of the H1N1 flu vaccine from the government ahead of virtually everyone else in the country. The firms are on a special list approved by the Centers for Disease Control & Prevention, a federal agency. Most doctors here in Los Angeles still can’t obtain the vaccine for their patients.