Ex–Obama Treasury Secretary and former official with the New York Fed, Tim Geithner, has arrived on Thank You Street.
Geithner’s share of the legal DC bribery — $400,000 for just three speeches, with more to certainly come.
Matt Berman at National Journal (my emphasis):
Former Treasury Secretary Tim Geithner Is Finally Getting Paid By Big Banks
During his tenure as Treasury secretary, Timothy Geithner was constantly dogged by the belief that he was spawned from Wall Street. This thinking was false: If you need a refresher, Geithner had actually spent most of his career in government, and none of it at a bank. When he left office this year, Geithner said that it would be “extremely unlikely” for that to change.
But as it turns out, Geithner is now being paid hundreds of thousands of dollars by massive financial organizations. It’s just that he isn’t being paid to work on Wall Street; he’s just being paid to talk every now and then.
The Financial Times reports that Geithner, like countless former public servants before him, has hit the highly lucrative speaking circuit. He’s already made about $400,000 in just three engagements. And that tab is being footed by financial institutions such as Deutsche Bank and Blackstone, which paid him about $200,000 and up to $100,000, respectively.
There’s more at the link, but that much should hold you for now.
Geithner is the model for legal bribery in DC
This is the way our legal bribery system works for non-Congressional types like Geithner. For Congressional types, the pay is upfront. For non-Congressional types — like Bill Clinton — the pay comes after all services are rendered and the perp is safely out of “legal” quid-pro-quo territory.
The appearance of quid-pro-quo is nevertheless screamingly obvious. Here, for example, are our comments on Bill Clinton’s millions:
[K]eep in mind that Obama has a payday waiting as well. Bill Clinton is now worth $80 million and counting, and makes up to $500,000 per speech. A taste of how that works (my emphasis and paragraphing):
On December 21, 2000, President Bill Clinton signed a bill called the Commodities Futures Modernization Act. This law ensured that derivatives could not be regulated, setting the stage for the financial crisis.
Just two months later, on February 5, 2001, Clinton received $125,000 from Morgan Stanley, in the form of a payment for a speech Clinton gave for the company in New York City. A few weeks later, Credit Suisse also hired Clinton for a speech, at a $125,000 speaking fee, also in New York. It turns out, Bill Clinton could make a lot of money, for not very much work.
They don’t call him the Big Dog for nothing. Quid pro quo? You decide. Either way, Obama’s lining up a ton of quid on the credit side of his ledger, for whatever quo awaits.
The inner link is to Matt Stoller’s great piece on Bill Clinton’s $80 million post-electoral payday. A must-read if you’re looking for must-reads.
What Tim Geithner did
What did Tim Geithner do to earn this delayed first-installment thank-you check?
Many things, but the first that hit our radar was this: Geithner, as president of the New York Fed, helped arrange for AIG, which owed $62 billion or more to the likes of Goldman Sachs, to get 100 cents on the dollar for every dollar it owed, so that the likes of Goldman Sachs (and Bank of America, Merrill Lynch, Citigroup, Société Générale, Deutsche Bank) would not see one dime of loss on the “insurance” money owed them by bailed-out AIG.
In other words, AIG owed a ton of money to the banks named above because it sold them “insurance” (in the form of Credit Default Swaps, a kind of derivative) to protect Goldman Sachs et al from losing billions on their own mortgage-backed derivatives. The mortgage-backed derivative market collapsed in 2007–2008, and AIG, as the insurer, was on the hook for at least $62 billion in reimbursement to those banks.
AIG was collapsing. Without AIG’s money, the banks were likely collapsing as well. AIG, which didn’t have a fraction of what it needed in reserve (remember, thanks to Bill Clinton, derivatives were an unregulated, ruleless market), was instantly bankrupt and needed a taxpayer-financed bailout to survive.
How much of a bailout would AIG get? It fell to the likes of NY Fed president Tim Geithner and others to negotiate that. If Goldman Sachs et al could be induced (or forced) to accept a “haircut” (partial payment in lieu of payment in full), that taxpayer-financed number would be smaller. Instead, Geithner and his ilk argued for, and got, a full taxpayer-financed payout to AIG, which passed the money immediately to Goldman et al. Goldman and its fellow banks must have been ever so grateful.
Treasury Secretary Timothy Geithner was summoned to testify before the House Committee on Oversight and Government Reform yesterday in order to answer two questions: why did he sign off on AIG paying the big banks full value on insurance for bad assets like mortgage-backed securities–using $62 billion in taxpayer money–at a moment when everyone else was taking losses? And what was his role in the decision not to disclose to the public–which owned 80 percent of AIG at the time–the names of the banks and the payments they received, as AIG was prepared to do before the Federal Reserve Bank of New York (FRBNY) run by Geithner advised them not to? …
Geithner argued that the New York Fed was operating under a gun. In November 2008, credit rating agencies–the same ones that gave mortgage-backed securities their highest AAA rating–were about to screw us again by downgrading AIG’s credit rating when taxpayers had already handed the company an $85 billion bailout in September. A downgrade would require AIG to pay out tens of billions of dollars more in collateral payments to the banks on the credit default swaps (insurance on the bad assets)–money that it didn’t have and that Geithner maintained would force the company to collapse. …
How was it Goldman and the other firms got such a sweet deal on this backdoor bailout via AIG?
“The money going into AIG is going right out to the counterparties,” said [Democratic Congressman Stephen Lynch of Massachusetts]. “This is a pass-through. And the folks on the other side are Goldman Sachs–that’s a principal beneficiary. And we don’t negotiate a nickel–not a nickel, not a cent–off of what they’re getting. … You had every opportunity–every opportunity to weigh in on behalf of the American people and make these people take a new deal, make them take a haircut. You scalped the folks at Bear Stearns–two cents on a dollar, they got. The folks at Goldman Sachs got a hundred cents on a dollar. That is just unacceptable. Totally unacceptable.”
Of course the banks could have been forced to accept a haircut — so long as the government had asked the question the right way. That right way would be: “How much of a government bailout would you like, none or what we offer?” But Geithner decided they needed it all. (There’s even a story that the banks were willing to take less than full reimbursement, but were talked out of it by the Geithner negotiating team; I can’t find the link, however.)
Remember, the bailout of AIG was really a back-door bailout of Goldman and ilk, who would also have gone under according to Geithner (see the full version of the first quote above). That’s what all that talk of “preventing a full collapse of the banking system” was about. The Big Boy banks had lost their collective butt, and Geithner had handed it back to them, for free. Now Geithner is getting his reward — on Thank-You Street.
And your reward for giving them their reward?
So that’s the way it works in the world of Your Betters. But don’t feel forgotten. As a thank-you to you for allowing Your Betters to succeed so nicely, they offer you this small token:
Class War Kitteh says — Enjoy your trickle-down, guys ‘n’ gals. It’s the least they could do. Literally.
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