BLOG VIEW: Last November, Rep. Kevin Brady, R-Texas, managed to get himself a Warholian 15 minutes worth of fame during a meeting of the congressional Joint Economic Committee. Brady confronted Treasury Secretary Timothy Geithner with a surplus of well-rehearsed bluster and a minimum of coherence, claiming there was a ‘growing liberal consensus’ to match a conservative opinion that Geithner was a failure as the ‘the point person on the economy.’ Brady then bluntly asked Geithner, ‘Will you step down from your post?’
Another Republican on the committee, Rep. Michael Burgess of Texas, stated that he disagreed with Brady's diagnosis. ‘I don't think you should be fired,’ he said directly to Geithner. ‘I thought you should have never been hired.’
Actually, neither Brady nor Burgess can claim credit for originating the get-lost-Geithner push. Back in March 2009, Rep. Connie Mack, R-Fla., demanded his resignation following the dust storm over Geithner's handling of the controversy involving $165 million in bonus payments paid to American International Group Inc. (AIG) employees.
‘[The] news on the AIG bonus scandal is but the latest fiasco under his watch and he has lost the confidence of the American people,’ said Mack of a secretary who was barely in office for two months. ‘Quite simply, the Timothy Geithner experience has been a disaster.’
Needless to say, this drumbeat for resignation did not result in Geithner's departure from his office. But that's not to say that the Republicans have forgotten about the Treasury secretary. Last week, Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, sent Geithner a letter (which he happily shared with the press) asking for the secretary to explain his Dec. 24, 2009, decision to uncap federal support for Fannie Mae and Freddie Mac. Corker expressed concern that this decision represented a ‘lack of understanding and transparency around this arrangement.’
Just to be certain that this is not strictly a Republican happening, Rep. Peter DeFazio, D-Ore., also joined the chorus in November. DeFazio stated, ‘I just do not feel that his orientation is other than Wall Street, and has not been other than Wall Street, and will not be other than Wall Street.’
Strangely, DeFazio was never on record demanding the resignation of Geithner's predecessor, Henry Paulson, a former Goldman Sachs CEO, or Paulson's predecessor, John W. Snow, a former chairman of the private equity firm Cereberus Capital Management.
I am not of the opinion that Geithner was the best choice to run the Treasury Department, nor can I say that his first year in office was a dazzling success. He does not inspire confidence as a speaker, and there are still too many loose ends to the economic crisis that he has yet to address, specifically government-sponsored enterprise reform.
There is also a problem lurking on the horizon via a subpoena issued last week by the House Committee on Oversight and Government Reform regarding the Federal Reserve of New York's actions in the bailout of AIG in 2008. Geithner, of course, was the New York Fed leader at the time, and the conspiracy theorists would love to connect the dots to draw Geithner into the catastrophe relating to AIG's mortgage-backed securities woes.
But for all of the noise that is going into the attacks on Geithner's performance, there is also a conspicuous silence by his critics on offering anything resembling a solution regarding the continuing crisis facing the housing markets and the mortgage banking industry.
For instance, last week, MortgageOrb reported news that one in every 7.5 homeowners in the U.S. is either behind on mortgage payments or in foreclosure, U.S. commercial mortgage-backed security delinquencies closed out 2009 at 4.71% – an increase of five times the 2008 statistic – and the prediction by Eric Rosengren, president of the Federal Reserve Bank of Boston, that the Fed's mortgage-buying program could cause home-loan rates to increase by as much as three-quarters of a percentage point. None of Geithner's aforementioned critics have come forward to comment on these developments, let alone offer a solution to fixing them.
Instead of taking potshots at Geithner, perhaps his critics can hunt down some serious solutions to genuine problems. Trying to embarrass Geithner makes for easy headlines, but there is some heavy lifting that no one is picking up, and as a result, everyone suffers.
– Phil Hall, editor, [b][i]Secondary Marketing Executive[/i][/b]
[i] (Please address all comments regarding this opinion column to hallp@sme-online.com.)[/i]
