Pallet Tim

George Washington's picture

Fed chair Ben Bernanke is nicknamed "Helicopter Ben" because of his
2002 speech recommending that money be dropped from a helicopter in
order to prevent deflation (and then actually doing it).

Similarly, I think we should nickname Secretary of Treasury Tim Geithner "Pallet Tim".

As I wrote last July:

A soon-to-be released report by special inspector general Neil Barofsky finds:

Many
of the banks that got federal aid to support increased lending have
instead used some of the money to make investments, repay debts or buy
other banks

[The banks have also distributed] bailout money to pay executives fat bonuses which they used to buy gold toilets and prostitutes, and to lobby Congress to stop any meaningful reform.

 

The
report by the special inspector general also calls on the Treasury
Department to require regular, more detailed information from banks
about their use of federal aid provided under the Troubled Asset Relief
Program.

According to the Post, the Treasury has refused to collect such information, and:

In
a written response, the Treasury again rejected that call. Officials
have taken the view that the exact use of the federal aid cannot be
tracked because money given to a bank is like water poured into an
ocean.

But just like dye is frequently added to streams
by scientists in order to trace the flow of water, Treasury could
easily track the flow of bailout funds. Indeed, the government has very
sophisticated software which tracks funds, which it uses in terrorism
investigations. But that is all moot. The truth of the matter is that
Treasury never even asked the banks to keep track of where the bailout money was going. If they ask, the banks would be required to keep track themselves.

As everyone now knows, the amount of the TARP bailouts could be much higher than $700 billion. See this and this. The amount could be in the trillions.

And Treasury is administering trillions more through its other "emergency" programs.

Of course, Geithner's New York Fed also pushed to keep pay AIG's CDS counterparties at full value, and then to keep the deal secret.

But Pallet Tim had experience distributing large sums of money without any oversight even before he became Treasury Secretary.

In July 2009, Congressman Henry Waxman stated:

In a 13 month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills from the United States to Iraq. To do that, the Federal Reserve Bank in New York
had to pack 281 million individual bills ... onto wooden pallets to be
shipped to Iraq. The cash weighed more than 363 tons and was loaded
onto C-130 cargo planes to be flown into Baghdad...

The Los Angeles Times reported at the time:

Prior audits by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, found that more than $8.8 billion in such funds could not be properly accounted for.

Bloomberg wrote:

A
report from Waxman's House Oversight and Government Reform Committee
... described contractors being told to bring big bags to collect
shrink- wrapped bundles of money and one episode where a Bremer staff
member was allegedly told to spend $6.75 million in a week.

"We
have no way of knowing if the cash that was shipped into the green zone
ended up in enemy hands,'' Waxman, a California Democrat, said at
today's hearing.

I'm not too worried about the money
having fallen into enemy hands. I think it is much more likely that it
fell into the hands of gleeful defense contractors, like these happy
fellows:


In addition, ABC noted that there might have been a partisan bias:

Rep.
Paul Hodes, D-N.H., claimed that recent college graduates with
Republican ties were sent to Iraq instead of experienced government
personnel.

 

Rodes challenged, "I want to know why half the U.S.
staff had never been outside of the country before and had to get a
passport for the first time?"

(I'm not trying
to make this a partisan issue: under the current Democratic
administration, I would guess that Democratic folks are favorably
getting their palms greased).

$2.4 billion of these $100 dollar bills were loaded onto pallets, put on C-130s and shipped to Iraq in June 2004:

Then,
when the shipment date changed, officials had to scramble to line up
U.S. Air Force C-130 cargo planes to hold the money. They did, and the
$2,401,600,000 was delivered to Baghdad on June 22, 2004.

It was the largest one-time cash transfer in the history of the New York Fed

And guess who was the head of the New York Fed at the time this was going on?

Yup ... Pallet Tim.

Note:
I am not implying that the Fed's shipment to Iraq were illegal (they
were apparently part of a UN-sponsored Iraqi oil revenue arrangement).
And I am not implying that Geithner is responsible for the theft of
billions of dollars by defense contractors or others - he was never
asked to oversee distribution of the funds once they arrived in Iraq,
and he wasn't head of the New York Fed when the shipments started.

I
am simply saying that Geithner has long been a yes-man to the
powers-that-be, who ships pallets of money wherever he is told without
question or any follow-up or tracking whatsoever.