May 2014 archive

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

New York Times Editorial Board: Pfizer’s Ploy and the Porous Tax Laws

Pfizer’s $119 billion offer to buy AstraZeneca, the British drug company, is driven largely by its desire to cut its tax bill. It is a ploy made possible by porous tax laws in the United States that encourage corporate tax avoidance and by laws in Britain and elsewhere that abet it. [..]

The Pfizer move is called an inversion, in which an American company is able to incorporate abroad by acquiring a foreign company. The buyer, in effect, becomes a subsidiary of a foreign parent – even though American shareholders own most of the merged company and the company’s headquarters and top executives stay in the United States. Incorporating in one country and being based in another creates opportunities to play the tax laws of one nation off against another’s; conceivably, profits might not be taxed in any country. Some 25 companies have used inversions since 2008.

The White House wants to block the practice, and legislation to do so has been introduced by Senator Carl Levin, Democrat of Michigan. But until Congress actually changes the law, inversions will continue, reducing revenues and undermining the whole notion of tax fairness.

Heidi Moore: Jamie Dimon’s charm offensive may rub struggling customers the wrong way

JP Morgan has to prove that it’s doing business in a way that it can be proud of, not just donate money to good causes

Can you buy better karma? JP Morgan wants to give it a shot with a money-backed charm offensive of late – including a $100m package of support to the City of Detroit and a pledge of $20m over the next five years to help military veterans and their families.

The residents of Detroit and those military families may not want to look a philanthropic gift horse in the mouth, and understandably so. But is JP Morgan just doing public relations? Perish the thought – says JP Morgan.

“The cynic would be wrong,” CEO Jamie Dimon told the Today Show’s Matt Lauer about anyone who would see the Detroit investment as merely good PR for his bank. “We invest and develop communities around the world. And we’ve been doing this since our heritage started 200 years ago. So that’s what banks do.”

It is unlikely that Dimon’s sense of largesse will challenge that of Pope Francis.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

May 24 is the 144th day of the year (145th in leap years) in the Gregorian calendar. There are 221 days remaining until the end of the year.

On this day in 1775, John Hancock is elected president of the Second Continental Congress.

ohn Hancock is best known for his large signature on the Declaration of Independence, which he jested the British could read without spectacles. He was serving as president of Congress upon the declaration’s adoption on July 4, 1776, and, as such, was the first member of the Congress to sign the historic document.

John Hancock graduated from Harvard University in 1754 at age 17 and, with the help of a large inherited fortune, established himself as Boston’s leading merchant. The British customs raid on one of Hancock’s ships, the sloop Liberty, in 1768 incited riots so severe that the British army fled the city of Boston to its barracks in Boston Harbor. Boston merchants promptly agreed to a non-importation agreement to protest the British action. Two years later, it was a scuffle between Patriot protestors and British soldiers on Hancock’s wharf that set the stage for the Boston Massacre.

Hancock’s involvement with Samuel Adams and his radical group, the Sons of Liberty, won the wealthy merchant the dubious distinction of being one of only two Patriots-the other being Sam Adams-that the Redcoats marching to Lexington in April 1775 to confiscate Patriot arms were ordered to arrest. When British General Thomas Gage offered amnesty to the colonists holding Boston under siege, he excluded the same two men from his offer.

President of Congress

With the war underway, Hancock made his way to the Continental Congress in Philadelphia with the other Massachusetts delegates. On May 24, 1775, he was unanimously elected President of the Continental Congress, succeeding Peyton Randolph after Henry Middleton declined the nomination. Hancock was a good choice for president for several reasons. He was experienced, having often presided over legislative bodies and town meetings in Massachusetts. His wealth and social standing inspired the confidence of moderate delegates, while his association with Boston radicals made him acceptable to other radicals. His position was somewhat ambiguous, because the role of the president was not fully defined, and it was not clear if Randolph had resigned or was on a leave of absence. Like other presidents of Congress, Hancock’s authority was limited to that of a presiding officer. He also had to handle a great deal of official correspondence, and he found it necessary to hire clerks at his own expense to help with the paperwork.

Signing the Declaration

Hancock was president of Congress when the Declaration of Independence was adopted and signed. He is primarily remembered by Americans for his large, flamboyant signature on the Declaration, so much so that “John Hancock” became, in the United States, an informal synonym for signature. According to legend, Hancock signed his name largely and clearly so that King George could read it without his spectacles, but this fanciful story did not appear until many years later.

With the debate over the Keystone XL Pipeline continuing, another important issue has arisen, transportation of crude oil by rail. Recent derailments and explosions have also brought into question safety considerations and the transport of Bakken crude, which is more dangerous to ship than other crude oil due to its flammability. This is not a new problem, in fact, it has been going on for decades and has been focused on the railroad tank car used, the DOT-111-A, as this McClathcy article reported in January:

Federal regulators might be weeks away from issuing new safety guidelines for tank cars carrying flammable liquids, after a series of frightening rail accidents over the past six months.

But the type of general-service tank car involved in recent incidents with crude oil trains in Quebec, Alabama and North Dakota – the DOT-111-A – has a poor safety record with hazardous cargoes that goes back decades, raising questions about why it took so long for the railroad industry and its federal regulators to address a problem they knew how to fix.

Other, more specialized types of tank cars received safety upgrades in the 1980s, and the industry’s own research shows they were effective at reducing the severity of accidents.

Tank car manufacturers have built new DOT-111A cars to a higher standard since 2011, but the improvements haven’t caught up to tens of thousands of older cars.

To be sure, improper railroad operations or defective track cause many accidents involving tank cars. But the National Transportation Safety Board, which makes recommendations but has no regulatory authority, has cited the DOT-111A’s deficiencies many times over the years for making accidents worse than they could have been.

In a segment on her show just last week, MSNBC’s Rachel Maddow illustrated the safety shortcomings of those rail tank cars used to transport this volatile crude oil, pointing to accidents, explosions, and toothless warnings going back over decades.

In April, the National Transportation and Safety Board (NTSB) has called on regulators to tighten standards and in early May, the Transportation Department issued a safety advisory pleading with companies that transport crude oil by train to discontinue old railcars

The advisory is non-binding, meaning it does not require companies to follow it, as an emergency order would. Yet it does apply to approximately 20,000 old tanker cars that companies rely on to carry Bakken crude from oil fields in North Dakota throughout the continent. The Transportation Department (DOT) recommended that only the sturdiest cars available are put to use, and that cars that cannot be destroyed should be updated.

Wednesday’s advisory came on the same day that the Transportation Department issued an emergency order forcing companies to provide communities alongside the rail routes with more information about the problems that are created when a spill or explosion takes place.  [..]

The DOT itself admitted crude shipments present “an imminent hazard” in an emergency order forcing companies to be more transparent with the areas they go through. Trains carrying oil generally include at least 100 cars. The emergency order requires all carloads with more than one million gallons of Bakken crude, equivalent to approximately 35 cars, to give local lawmakers notice that a train will be making its way through. [..]

Companies shipping oil by rail have never been forced to notify communities regarding hazardous material on board until this week.

An estimated 715,000 barrels of Bakken crude oil are shipped by rail every day.

It appears the oil industry is not going to lie down and take it.

American Petroleum Institute said it’s important to “separate fact from fiction” when it comes to shipping crude oil from North Dakota by rail.

The North Dakota Petroleum Council published a study Tuesday that shows crude oil taken from the Bakken reserve area in the state is similar to other grades of oil from North America. It does not, as the U.S. Department of Transportation suggests, pose a greater risk when transported by rail, the council said.

Rachel Maddow exposed the bias of that report

It is past time that the Department of Transportation stopped issuing toothless warnings and cracked down with inspections and heavy fines.

I’d like to explain why I’ve decided to include some familiar material in Geithner Extended (available in Earth Tones and Relentless Winter and it’s not just to fill up space (though it does an admirable job and that function is also important to the overall design).

The obvious reason is reinforcement by repetition.  The most charitable explanation of Geithner’s actions is that he’s an ignorant idiot.  Any student of Samuelson who actually achieved more than a courtesy ‘C’ in Econ 101 could tell you they’re nonsensical and self contradictory on their face, one need not be a Nobel Laureate like Krugman or Stiglitz; and denial of his policy’s abject failure if not classically delusional is a best an egotistical self defense mechanism.  Other explanations, while likely true, are more cynical and sinister.

However there is a more subtle nuance to which I’d like to draw your attention.

One great lesson I learned at Daily Kos is that most web surfing is remarkably shallow.  Markos is militant that Front Page pieces appear in their entirety on the Front Page not because he isn’t a hit whore (he’s said as much many times), but because he knows that people never click the links, even to read the bulk of an article.  It’s a time honored journalistic tradition called pyramiding, putting a short summary at the top (who, what, when, where, why, and how; or in an essay or speech- telling people what you’re about to say, saying it, and then telling them what you said).  If your object is maximum impact on the web you make your writing as accessible as possible which translates to in your face and short, otherwise it’s tl;dr (too long; didn’t read, now I’m going to start a flame war based on my visceral reaction to your title which is all I care about and am capable of understanding).

I am such a rebel that many of my links are Easter Egg jokes.  What’s important is that they amuse me.

This matters less to me on Daily Kos where my likelihood of appearing on the Front Page can be measured in two words- ‘slim’ and ‘are you fucking kidding?’.  My readers there are either regulars or people who tune in through the ‘Recent Diaries’ list.  In any case the whole piece is visible since the effort is a prerequisite.

On my own sites, The Stars Hollow Gazette and DocuDharma, I structure around it.

When I put up the embedded video of last night’s interview with Tim Geithner (something that is not possible at Daily Kos since they refuse to support iframe video, the only format offered from Comedy Central, because of some imaginary ability to use it to launch an exploit attack), I decided to include the material that, while it was part my cross posting of TDS/TCR (Unreliable Narrator), appeared below the fold where most visitors wouldn’t see it.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Follow us on Twitter @StarsHollowGzt

Paul Krugman: Crisis of the Eurocrats

A century ago, Europe tore itself apart in what was, for a time, known as the Great War – four years of death and destruction on an unprecedented scale. Later, of course, the conflict was renamed World War I – because a quarter-century later Europe did it all over again.

But that was a long time ago. It’s hard to imagine war in today’s Europe, which has coalesced around democratic values and even taken its first steps toward political union. Indeed, as I write this, elections are being held all across Europe, not to choose national governments, but to select members of the European Parliament. To be sure, the Parliament has very limited powers, but its mere existence is a triumph for the European idea.

But here’s the thing: An alarmingly high fraction of the vote is expected to go to right-wing extremists hostile to the very values that made the election possible. Put it this way: Some of the biggest winners in Europe’s election will probably be people taking Vladimir Putin’s side in the Ukraine crisis.

New York Times Editorial Board: A Surveillance Bill That Falls Short

A year ago, it would have been unimaginable for the House to pass a bill to curtail the government’s abusive surveillance practices. The documents leaked by Edward Snowden, however, finally shocked lawmakers from both parties into action, producing promises that they would stop the government from collecting the telephone data of ordinary Americans and would bring greater transparency to its domestic spying programs.

Unfortunately, the bill passed by the House on Thursday falls far short of those promises, and does not live up to its title, the U.S.A. Freedom Act. Because of last-minute pressure from a recalcitrant Obama administration, the bill contains loopholes that dilute the strong restrictions in an earlier version, potentially allowing the spy agencies to continue much of their phone-data collection.

Still, the bill finally begins to reverse the trend of reducing civil liberties in the name of fighting terrorism, as embodied in various versions of the Patriot Act. And if the Senate fixes its flaws, it could start to rebuild confidence that Washington will get the balance right.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

May 23 is the 143rd day of the year (144th in leap years) in the Gregorian calendar. There are 222 days remaining until the end of the year.

Click on images to enlarge

On this day in 1873, the Canadian Parliament establishes the North West Mounted Police, the forerunner of the Royal Canadian Mounted Police.

North-West Mounted Police

The RCMP has its beginnings in the North-West Mounted Police (NWMP). The police was established by an act of legislation from the Temporary North-West Council the first territorial government of the Northwest Territories. The Act was approved by the Government of Canada and established on May 23, 1873, by Queen Victoria, on the advice of her Canadian Prime Minister, John A. Macdonald, with the intent of bringing law and order to, and asserting sovereignty over, the Northwest Territories. The need was particularly urgent given reports of American whiskey traders, in particular those of Fort Whoop-Up, causing trouble in the region, culminating in the Cypress Hills Massacre. The new force was initially to be called the North West Mounted Rifles, but this proposal was rejected as sounding too militaristic in nature, which Macdonald feared would antagonize both aboriginals and Americans; however, the force was organized along the lines of a cavalry regiment in the British Army, and was to wear red uniforms.

The NWMP was modelled directly on the Royal Irish Constabulary, a civilian paramilitary armed police force with both mounted and foot elements under the authority of what was then the United Kingdom of Great Britain and Ireland. First NWMP commissioner, Colonel George Arthur French visited Ireland to learn its methods.

The initial force, commanded by Commissioner French, was assembled at Fort Dufferin, Manitoba. They departed on July 8, 1874, on a march to what is now Alberta.

The group comprised 22 officers, 287 men – called constables and sub-constables – 310 horses, 67 wagons, 114 ox-carts, 18 yoke of oxen, 50 cows and 40 calves. A pictorial account of the journey was recorded in the diary of Henri Julien, an artist from the Canadian Illustrated News, who accompanied the expedition.

Their destination was Fort Whoop-Up, a notorious whiskey trading post located at the junction of the Belly and Oldman Rivers. Upon arrival at Whoop-Up and finding it abandoned the troop continued a few miles west and established headquarters on an island in the Oldman, naming it Fort MacLeod.

Historians have theorized that failure of the 1874 March West would not have completely ended the Canadian federal government’s vision of settling the country’s western plains, but could have delayed it for many years. It could also have encouraged the Canadian Pacific Railway to seek a more northerly route for its transcontinental railway that went through the well-mapped and partially settled valley of the North Saskatchewan River, touching on Prince Albert, Battleford and Edmonton, and through the Yellowhead Pass, as originally proposed by Sandford Fleming. This would have offered no economic justification for the existence of cities like Brandon, Regina, Moose Jaw, Swift Current, Medicine Hat, and Calgary, which could, in turn, have tempted American expansionists to make a play for the flat, empty southern regions of the Canadian prairies.

The NWMP’s early activities included containing the whiskey trade and enforcing agreements with the First Nations peoples; to that end, the commanding officer of the force arranged to be sworn in as a justice of the peace, which allowed for magisterial authority within the Mounties’ jurisdiction. In the early years, the force’s dedication to enforcing the law on behalf of the First Nations peoples impressed the latter enough to encourage good relations between them and the Crown. In the summer of 1876, Sitting Bull and thousands of Sioux fled from the US Army towards what is now southern Saskatchewan, and James Morrow Walsh of the NWMP was charged with maintaining control in the large Sioux settlement at Wood Mountain. Walsh and Sitting Bull became good friends, and the peace at Wood Mountain was maintained. In 1885, the NWMP helped to quell the North-West Rebellion led by Louis Riel. They suffered particularly heavy losses during the Battle of Duck Lake, but saw little other active combat.

India Jones Part 3

The Pillow Montana Uses To Practice Kissing

This man made millions suffer: Tim Geithner’s sorry legacy on housing

David Dayen, Salon

Wednesday, May 14, 2014 07:45 AM EDT

“I saw some of the excerpts about housing and I must say I split my side in laughter because Tim Geithner personally and actively opposed mortgage refinancing, constantly,” Hubbard told Politico. “And now he’s claiming this would be a great idea in the country.”

…

When Hubbard talks about refinancing, he’s being very specific. He co-wrote a plan in 2008 endorsing mass refinancing through Fannie Mae and Freddie Mac, as a economic stimulus, getting homeowners reduced monthly payments. This was one of the major fiscal policy tools available to the Administration that didn’t require additional spending – the Federal Reserve had lowered interest rates, it was merely up to Fannie and Freddie to take advantage of it. But in the early years of the crisis, the White House did little. Brad DeLong backs up Hubbard on this point, saying he never got a satisfactory answer for the lack of mass refinancing.

It took until 2012, just coincidentally an election year, for the administration to remove blockages on their key refinancing program (the Home Affordable Refinancing Program, or HARP). In an interview with Ezra Klein, Geithner plays the classic three-card monte trick of taking credit for every single refinance in the entire country, a number surpassing 20 million. In reality, HARP just hit 3 million refis this February, with the overwhelming majority of them coming after 2012. In the darkest years of the recovery, failing to engage in mass refinancing, particularly for those underwater homeowners (who owed more on their houses than they were worth) who couldn’t get a refi without government assistance, really missed an opportunity to put more money in homeowner’s pockets that would get spent.

On the more critical issue of helping homeowners stay in their homes, Geithner looks even worse. One smoking gun in the debate is the continued presence, throughout the Geithner tenure, of Ed DeMarco, a Bush-era official running the Federal Housing Finance Agency, the conservator for Fannie and Freddie. DeMarco blocked both refinancing for underwater borrowers and principal reductions for struggling homeowners, seen as the strongest and most sustainable way to keep people in their homes. The administration made no effort to remove DeMarco from his post despite claiming to be at odds with his policies.

In reality, Geithner made the same arguments as DeMarco against principal reduction, most explicitly in a hearing of the Congressional Oversight Panel in December 2009, arguing it would be “dramatically more expensive for the American taxpayer, harder to justify, and] create much greater risk of unfairness.” Geithner later cited the [potential moral hazard of “strategic default,” where homeowners would intentionally not pay their mortgage to get a principal reduction (something that never has and never would happen), to argue against making such modifications mandatory when they made sense for the investor and the borrower.

Keep in mind that this was the guy who handed hundreds of billions of dollars over to banks with basically no strings attached, suddenly worried about fairness when homeowners get a break on their mortgage payments. The White House was certainly chilled by the Rick Santelli rant about “the loser’s mortgages,” and mindful of giving money to the “wrong” people, but that was a political problem, one that could be solved by a stronger economic recovery, like through preventing foreclosures.

In his book, Geithner says that “I don’t think a more compliant FHFA would have produced a dramatically different result,” meaning that whatever differences existed between the administration and DeMarco were immaterial. In fact, the thrust of Geithner’s argument on housing in the book is that the administration did the best they could possibly do, that the alternatives were impractical or unwise, and that ultimately their efforts prevented 5 million foreclosures. This is another three-card monte trick, taking credit for every single mortgage modification, including ones not aided by the government’s HAMP (Home Affordable Modification Program) incentive payments. Even modifications that later went into default get counted as “preventing” a foreclosure under Geithner’s math. For context, there are currently not even 1 million permanent HAMP modifications.

Here are a few points to puncture holes in that balloon. On January 15, 2009, Larry Summers wrote a letter to Congressional leaders, promising a “sweeping effort to address the foreclosure crisis,” including a measure to “reform our bankruptcy laws.” This letter was critical to getting the second tranche of bailout money for the banks out of Congress, and yet afterwards, the administration gave little more than token support for the bankruptcy reform, known as “cram-down,” which would have allowed judges to modify terms of primary residence mortgages. Geithner admits in his book that “I didn’t think cram-down was a particularly wise or effective strategy,” meaning that, unless you believe Geithner played no role in administration decisions, the economic team effectively lied to Congress about cram-down to get the bailout money.

Geithner elaborates about cram-down to Klein, saying you would still have to go through a broken servicing industry and the court system to get it done, showing that he has no understanding of the value of cram-down whatsoever. The point, as the Cleveland Federal Reserve makes clear, wasn’t to actually use the bankruptcy process, it was to keep it in reserve it as a threat, to force banks toward modifications instead of a unilateral write-down administered by a judge. The point was increasing leverage for homeowners, and it’s not surprising Geithner wouldn’t grasp that.

Geithner: As Wrong about Soccer as Regulation

By William K. Black, New Economic Perspectives

Posted on May 21, 2014

Geithner begins his (brief) discussion of his regulation of Citi by stating that seven months after he became NY Fed President the NY Fed imposed a “hefty fine” on Citi. And then one reads the single clause that he devotes to detailing Citi’s conduct. It deliberately targeted its customers in a scheme to profit by placing its customers in grotesquely unsuitable investments – and then it covered up that abuse by lying to the NY Fed’s examiners – which is a federal felony. The deliberate sale of unsuitable investments to its own elderly customers may not have been a crime, but it was reprehensible and could have provided the basis for the “removal and prohibition” of the officers who led the abuse and huge fines against them. The crime of lying to examiners to cover up the breach of Citi’s fiduciary duties and own procedures should have led the NY Fed to file a criminal referral and demand that the Department of Justice (DOJ) prosecute the Citi officers who committed the felony. Instead, Geithner imposed only a “hefty fine” (trivial from Citi’s perspective) as a minor cost of doing Citi’s abusive and criminal business. It is revealing that he chooses to start his brief discussion of Citi with example of his feebleness as a regulator under the delusion that it demonstrates how tough he was. His narrative is deliberately disingenuous and unintentionally damning of Geithner as a faux regulator.

…

Remember, Geithner wrote this only months ago – after the federal government, state government, and investigators had demonstrated the three epidemics of accounting control fraud that drove the crisis, plus the Euribor and Libor cartels/frauds run by the world’s largest banks, plus the willingness of top banks to aid the most violent drug cartels in the world and (if Geithner believes his own agency’s findings) terrorist groups, and nations subject to Treasury sanctions because they are developing nuclear capabilities and/or support terror.

Geithner obviously still doesn’t get it. His story is preposterous – but it explains why there are zero prosecutions of any of the elite bankers for leading the frauds that caused the crisis. His story is that he was misled about the “capab[ility] and ethic[s]” of “Wall Street” because met almost exclusively with: “talented senior bankers, and selection bias probably gave me an impression that the U.S. financial sector was more capable and ethical than it really was.” Even Greenspan is more honest than Geithner – and failing that relative test means that Geithner should never be allowed to run anything.

…

I have a question for Geithner that perhaps some reporter would ask when he is flogging his book: was it the “senior bankers'” supreme “talent[],” “capab[ility],” or “ethic[s]” – or some combination of those stellar traits – that proved most useful in making them fabulously wealthy through “looting” “their” banks (Akerlof & Romer 1993) and brought the global economy to the edge of destruction (Geithner 2014)?

Geithner is seriously peddling the claim – in 2014 – that the crisis was caused by the junior clerks and lending officers of the banks. The noble “senior officers” that dined with Geithner are blameless. After all, everyone knows that the systemically dangerous institutions (SDIs) are “too big to manage” – no, wait, must not admit that or my support for SDIs looks bad. Rewind tape. Delete last sentence. Geithner’s “introspection” is phony.

Geithner has contributed the ideal dishonest bookend book to pair with a book that blames the crisis on the idiot-savant hairdressers who conned the poor banks run by Geithner’s “talented … capable and ethical” “senior bankers” into making them home loans they could not repay. Please put the over-the-top paperback fictions novellas of your collection between those bookends so that they will feel at home in your library. And if you believe the “blame the loan officer” and “blame the hairdresser” memes – well, there’s a house in Las Vegas I’d like to sell you at its June 2006 price. Read Geithner to see where Wall Street accountability went to die. And then recall that Axelrod described President Obama and Geithner as having a mutual “man crush.”

Andrew Ross Sorkin, Timothy Geithner, and the Three Card Monte Model of Propaganda

by Yves Smith, Naked Capitalism

Posted on May 12, 2014

The focus on TARP (and to a lesser degree, Lehman) allows Sorkin to omit mention of actions that were clearly Geithner’s doing, including: his fighting Sheila Bair tooth and nail on resolving the clearly insolvent Citigroup; his decision to pay AIG credit default swaps counterparties 100 cents on the dollar; his defense of the failure to haircut AIG employees’ pay; [Treasury’s acceptance of intransigence by AIG’s CEO, Robert Benmosche; his refusal to use $75 billion in TARP that Paulson’s Treasury had courteously left aside for homeowner relief; the clearly too permissive “stress tests”; Geithner’s Treasury allowing banks to repay TARP funds early rather than rebuild their balance sheets (get this: because they were eager to escape very limited restrictions on executive pay); Treasury letting banks repay TARP warrants at an unduly cheap price until Elizabeth Warren’s Congressional Oversight Panel caught them out; his cynical policy of “foaming the runway,” as in using what were billed as homeowner relief programs merely to attenuate foreclosures and thus spread out bank losses, which had the secondary effect of wringing more money out of already stressed borrowers before they were turfed out of their homes. And this is far from a complete list of Geithner’s actions that favored banks over the public at large.

Tim’s Not Wild About Larry

By MICHAEL HIRSH, Politico

May 20, 2014

What is new and startling is the sheer number of the fights that occurred between the administration’s two top economic policy-makers, as well as the acerbity of their rivalry.  Geithner gives accounts of the chronic policy disagreements between them over the “Buffett Rule,” a proposal to tax very rich individuals, which Geithner supported and Summers thought was “gimmicky”; over the “Volcker Rule,” the curb on risky bank trading that Geithner came to warily endorse but Summers thought a “stupid and craven concession to populism”; and over nationalizing the banks (Summers thought it wasn’t a bad idea, while Geithner hated it). What emerges is a portrait of two men struggling for power and influence but also in a state of constant strife over ideas. In general, Summers is more of a progressive about changing Wall Street and tackling health care and other aspects of the ailing economy-one reason he left the administration in 2010 was that he saw Obama bowing to GOP demands for austerity at a time when more stimulus was needed, friends say-while Geithner is more the pure crisis manager, monomaniacally convinced that the economy can come back only if Wall Street does.

…

In the summer of 2013, Obama was reportedly keen again to appoint Summers as Federal Reserve chairman. But by then criticism of both Summers and Geithner had mounted over what critics deemed to be half-hearted stimulus and financial reform thanks in large part to their advice-a politically troublesome problem for the president amid the lingering aftereffects of the Great Recession. Summers, in particular, was a target of liberal economists such as Paul Krugman and Joseph Stiglitz for not pushing a much bigger stimulus. Some senators also wanted to confront him over his role in deregulating the financial system during the Clinton years, which helped set the stage for the 2008 financial crisis. After progressive Democrats in the Senate began lining up against him, Summers withdrew his name, and Janet Yellen, Bernanke’s No. 2, was chosen instead.

…

Why does any of this matter? In large part because Geithner supplies an unprecedented glimpse into the very small Democratic fraternity that has run the world’s biggest economy for much of the last two decades. Many of them are disciples of Robert Rubin, Bill Clinton’s former Treasury secretary, and until recently their views have been seen as largely monolithic. Clearly they are not, and depending on how the economy does, these lines of battle could reappear in Democratic Party politics going into 2016.