Timothy Geithner’s profanity-laced rant against Sheila Bair and Mary Shapiro for their rational, reality-based concerns about increasing the power of Federal Reserve Bank, as opposed to increasing oversight of the system, should elicit a kind of déjà vu because the scenario has been played before. (Note: Increasing oversight does not mean policy disclosure.)
In 1997-8, Brooksley Born, the head of the Commodities Futures Trading Commission, tried to open a discussion about introducing oversight measures into the OTC derivatives market by producing a memo because she could see that:
“There was no transparency of these markets at all. No market oversight. No regulator knew what was happening,” Born says. “There was no reporting to anybody.”
Summers, Rubin’s deputy (and now director of the National Economic Council), said the memo had “cast the shadow of regulatory uncertainty over an otherwise thriving market, raising risks for the stability and competitiveness of American derivative trading.”
History, in the form of the role these derivatives played in this economic disaster, has proven that she was right to undertake that initiative. Unfortunately, Greenspan, Leavitt, Rubin, and Summers, to name some major players, were effective in pushing legislation that ended the CFTC’s ability to undertake oversight.
Born assailed the legislation, calling it an unprecedented move to undermine the independence of a federal agency. In eerily prescient testimony, she warned of potentially disastrous and widespread consequences for the public. “Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans,” she testified that July. “Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”
Notwithstanding, her concerns were dismissed and her ominous predictions came to pass.
Geithner is a protégé of Summers.
Is it not an ironic twist of fate, and a testament to Geithner’s blind faith against oversight, that he, like his mentor before him, is assailing intelligent, moral, qualified women for pointing out the folly of his ways.
{Note: I defer all economic inquiries to our resident expert, Dakinikat. My interest in the situation is the social dynamic.}
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Filed under: Barack Obama, Economic Stimulus, Economy, feminism, financial bailout, Financial Meltdown of 2008, General, Recession/Depression 2008 | Tagged: Brooksley Born, Economy, feminism, Financial Regulation, Larry Summers, Mary Shapiro, OTC derivatives, Sheila Bair, The Federal Reserve, Timothy Geithner |
Sorry to be OT, but Breaking: Kim Jong Il has ordered the release of Euna Lee and Laura Ling… I think they will be flying back with Bill Clinton.
Sometimes diplomacy is giving a rabid dictator a way out for the greater good. The world will see the Clintons and America as the grown-ups in this exchange.
T4C,
On my way Down SoutH on June 27th I had a discussion about North Korea with a Texas oil man. He said North Korea was the most urgent military threat facing the U.S. I said Kim Il Jong was firing missiles because he was not well and he having a temper tantrum because the world was too busy dealing with more important things than to give him center stage. It was fun to have Hillary confirm my thoughts on the issue.
S
Wonderful news! I knew Big Dawg could pull it off.
HILLARY did it…love those Clintons.
Such wonderful news for a change!!! Off to read the headlines. BRB.
The Clintons are the best ever. That is all there is to say about it.
Thank God. I am very happy for the journalists.
Yeah, just heard that myself.
Go the Clintons!
Unfortunately, some things don’t change. Getting corporate men to take women seriously is still an uphill battle and it’s a tiresome, costly, and fruitless one.
D,
This was going to be a short piece on the potential benefits of matriarchy, but I thought it best to save it for my next post and back reference this one..
S
Are you going to include that der speigal thing you were talking about last night?
“Yup”, to quote you. 😉
Regarding the social aspect, I’ve finally come to the conclusion that these folks, mostly men, just like playing king of the mountain. They never outgrew their childish impulses.
g,
“Men are just large boys.”
– my mom
s
and girls are just short women
f,
Shucks. I feel deprofoundized.
s
The WSJ says that Geithner has a history of blowing up at Sheila Bair too.
http://blogs.wsj.com/economics/2009/08/04/geithner-has-blown-his-top-with-regulators-before/
D,
Hmm. Having just watched the second season of The Tudors I’m cannot help but think that he shares some of Henry’s quirks with regard to not getting his way. 😉
S
protecting debt holders over taxpayers?
He also mentioned protecting “gov’t policy.” Can’t let economic reality get in the way of messaging, ya know. Must protect the illusion.
Many people seem to have issues with Timmy. I just remembered an excerpt of William Cohen’s House of Cards (which I still intend to read this summer):
I think Geithner is completely full of himself, in an obnoxious way.
MaBlue,
Great link! It looks like a good selection for the book club.
S
D,
Actually, I was thinking of Henry’s desire for absolute power and his willingness to do whatever he could to make it so, regardless of the cost to others.
S