Conservative Society for Action

Geithner Doesn’t Get It!

He Wants “New Powers” to Ensure that our Country “Never Faces this Situation Again."

But it was TOO MUCH GOVERNMENT “POWER” that CAUSED the Problem in the First Place!

Unless Barney Frank, Nacy Peolosi, Chris Dodd and MOST INCUMBENTS are removed from office, the problem will continue. THEY caused the financial meltdown by FORCING AIG and others to make TOXIC LOANS in the name of “fairness”.

CONGRESS CAUSED the financial crisis!

Financial institutions NEVER gave loans to “hi-risk” people. It was an ACT of CONGRESS – The Community Reinvestment Act (CRA) – that FORCED AIG and others to give “poor-people” loans. PERIOD! There is no disputing this.

KICK Congress out of office in 2010!

There ARE lessons here that Geithner should learn:

Government Interference CAUSED the problem;
Government does not have the ability to RUN the financial sector;
Government should NOT have the RIGHT to FORCE banks to make bad loans (note that these laws have NOT been changed and these loans are still required);
Government CANNOT fix the financial system by implementing MORE regulation;
Congress must REMOVE the TOXIC PORTIONS of the Community Reinvestment Act – YES... REMOVE some regulations.

Congress needs to follow the 12-Steps of an addict. The FIRST step to recovery is to “ADMIT YOU HAVE A PROBLEM”.

Until Congress recognizes that IT is the problem, there can be no solution.

If you are SERIOUS and truly want to understand the impact that Congress had, please click and read the following document. This is a PDF document that you can load and/or save:

2008-10-03-trainwreck.pdf

You also need to carefully read these items:

http://www.csa-1776.org/bums.htm

http://www.csa-1776.org/agenda.htm#CRA

Despite all this, Treasury Secretary Timothy Geithner called on Congress to grant him new powers to regulate huge financial companies like insurance giant AIG, whose failure would pose a grave danger to the U.S. financial system and the broader economy.

Specifically, Geithner wants powers similar to those of the Federal Deposit Insurance Corporation, which has authority to seize control of banks, take over their bad assets and sell good ones to competitors.

"AIG highlights broad failures of our financial system," Geithner told the House Financial Services Committee. "We must ensure that our country never faces this situation again."

Federal Reserve Chairman Ben Bernanke, appearing with Geithner, agreed. He said the government's bailout of troubled insurance giant American International Group Inc. underscores the urgent need to safely wind down financial giants on the verge of collapse and subject them to much stronger regulatory oversight.

Much of the discussion centered on ways to help the government better deal with future AIG-like companies whose failure could devastate the financial system and the drag down the economy.

Geithner made it clear he believes the treasury secretary should be granted unprecedented power, after consultation with Federal Reserve Board officials, to take control of a major financial institution and run it. The treasury chief is an official of the administration, unlike the FDIC, which is an independent regulatory agency.

Bernanke and Geithner were braced for a scolding before lawmakers over the handling of bonuses at American International Group Inc., which has become a symbol of reckless risk-taking on Wall Street.

For his part, the Fed chief said he wanted to sue to stop insurance giant AIG from paying millions in bonuses, but lawyers advised against doing so.

AIG is a globally interconnected colossus, with 74 million customers worldwide and operations in more than 130 countries. The government decided it was simply too big to let fail.

"Its failure could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income and jobs," Bernanke told the panel.

As a result, the government has bailed out AIG four times, to the tune of more than $180 billion altogether. The company recently paid at least $165 million in bonuses to employees who worked in the financial products division that has been blamed for the its near-collapse. The bonuses came even as AIG reported a stunning $62 billion loss, the biggest in U.S. corporate history.

New York Attorney General Andrew Cuomo said Monday that 15 employees who received some of the largest bonuses from AIG have agreed to return them in full, totaling about $50 million.

Bernanke said it was "highly inappropriate to pay substantial bonuses" to the employees. Bernanke said he asked that the payments be stopped but was told that they were mandated by contracts agreed to before the government seized control of AIG on September 16.

"I then asked that suit be filed to prevent the payments," he said. Bernanke said that his legal staff counseled against this action on the grounds that Connecticut law provided for substantial punitive damages in the event any such suit failed. AIG's financial products division has a base in Connecticut.

AIG's decision to pay millions in bonuses has created a public relations headache for President Barack Obama at a time when he is trying to gin up public and political support for his economic policies, bank-rescue plan and overhaul of the nation's regulatory structure.

The FDIC-like powers being sought by Geithner would allow the treasury secretary to set up a conservatorship or receivership for a failing financial company. The government would have the power to take control of the firm and sell or transfer parts of it to reduce its risky position.

The secretary also would be allowed to make loans, buy assets, guarantee loans and make equity stakes to help stabilize the company. Importantly, Geithner said the government would have the power to "renegotiate or repudiate" a company's contracts, including those with its employees.

If such powers were in place last year, the government argues, it could have used them to better handle AIG and Bear Stearns, which were bailed out by the government, and Lehman Brothers, which wasn't rescued and was forced into bankruptcy.

Government bailouts of AIG, Citigroup Inc., Bank of America Corp. and others have put billions of taxpayers' dollars at risk over the past year and have angered the American public.