Obama's Wunderkind Fails
By: Floyd and Mary Beth Brown
FrontPageMagazine.com | Friday, April 17, 2009
“JP Morgan Chase, Wells Fargo, Fannie Mae and Freddie Mac all say they have increased foreclosure activity in recent weeks,” reported The Wall Street Journal on April 15, 2009. Why now? These firms had all instituted moratoriums on foreclosures as they waited for clarity from the Obama administration. That clarity never came.
Tim Geithner, Obama’s Treasury secretary, was given the job of slowing foreclosures. His first proposal was a flop. He started by announcing a mortgage bailout proposal that was so vague on details it could hardly be understood. Geithner and Obama’s economic team had months between the November election and the inaugural to formulate a plan and prepare it for the public; instead, Geithner waited until March and announced a non-plan. He went to Capitol Hill the next day and was harshly grilled by what should have been a friendly audience. The stock market plunged in reaction.
Timothy Geithner was marketed to America as a Wall Street “wunderkind.” As head of the New York Federal Reserve Bank, he worked closely on the initial Bush bailout scheme with Henry Paulson, Bush’s Treasury secretary. Wall Street hoped Geithner would continue the less interventionist policies of Bush and Paulson. Many believed that someone who was closely involved from the beginning could provide continuity of leadership, and keep in check the less business friendly voices in Obama’s team. All of these hopes have vanished.
Geithner’s problems began even before his confirmation, when Americans learned he cheated on his taxes. He was given nicknames such as “turbo tax cheat” or “tiny tax Timmy.” Finally, he paid his back taxes, and because of his “stellar” resume, he stumbled through to confirmation.
In fairness to Geithner, he has been handed a gigantic to-do list by his boss, President Obama. His mandate includes: saving the banking system, rescuing General Motors and Chrysler, bailing out AIG and other insurance firms, saving all homeowners nearing foreclosure, setting the salaries for employees working at companies receiving bailout funds, setting tax policy, and more. In essence, he has been asked by President Obama to become America’s central planning czar.
The record so far has been dismal. We learned that AIG was spending millions of taxpayer dollars on bonuses. The onus for this mistake is directly on the shoulders of Geithner and Senator Chris Dodd, D-Conn., who negotiated the bailout bill and included no protections from this profligacy. The public outcry over the incident was so great that even Obama and the Democrats feigned anger about AIG. Congress rushed to pass a bill to retroactively tax the AIG bonuses. Geithner neglected to attach any strings to the billions in taxpayer money he is handing out.
In recent weeks, Geithner has been busy working on Obama’s proposal to “fix” the auto industry. First step was firing GM’s old CEO and replacing him with one more acceptable to the United Auto Workers. This unprecedented expansion of governmental power is another example of central planning. Government control of GM is so thorough that GM is even being told what type of cars to produce. Obama is demanding GM build “small cars.” These central planners ignore that Americans have traditionally preferred the roomier and safer large SUVs and sedans.
When not overseeing the remaking of the auto industry, Geithner is busy micromanaging employee compensation rules. Geithner has been given by Barney Frank and his congressional colleagues the power to evaluate the wages of all employees at any firm receiving money from the federal bailouts. He is instructed to determine what each employee is actually worth.
In addition to running all of the companies receiving federal funds, firing CEOs, and managing our tax system, Geithner managed to destroy dollar confidence worldwide. In a passing statement at a news conference, Geithner admitted he admires the Chinese central bankers and that he and Obama are open to a major Chinese currency proposal. The Chinese suggested we abandon the U.S. dollar as the world’s settlement currency, and adopt a new world currency. Geithner’s casual acceptance of this scary idea, understandably, caused the dollar to freefall in the foreign exchange markets the next day.
Someone needs to tell Tim Geithner that central planning doesn’t work. No government official has the mental ability to handle all of these duties. Continued disaster is virtually guaranteed. The demands on Geithner also speak volumes about President Obama’s management abilities. Obama has his main economic adviser running around like a chicken with his head cut off. This doesn’t instill confidence in the administration.
The root of problem is arrogance. Geithner and Obama believe they can solve all our economic troubles with bigger government. Geithner is going to keep blundering until he and Mr. Obama realize that massive government growth cannot solve our current economic woes.
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