Time For Tim Geithner's Annual Top-Ticking Op-Ed, In Which We Learn That It Is Time To Panic About America's Banks

Tyler Durden's picture

When just under a year ago, Tim Geithner penned "Welcome to the Recovery" he top ticked the zenith of the business cycle to the day if not the hour, with the economy finding itself in a straight line contraction ever since then, blissfully delayed by a 9 month QE2 detour. Now that the QE2 is no longer a factor, we are already seeing economists everywhere cut their Q2 GDP forecasts to sub 2%, an effective stall speed for the economy in real terms, and reducing their full year economic forecasts. Which is why we were delighted to learn that today Geithner has just released his latest iteration of a top-ticking missive, this one titled inappropriately enough "Dodd-Frank Has Made Our Banks Stronger" which is supremely ironic because not only has Dodd-Frank not made anything stronger as it has not even been remotely implemented, but as Bank of America, Goldman and Citi's Q2 results have just confirmed, the US bank sector is now the weakest it has been in years. Thus, when accentuated with a Geithner adminition to not panic our only advice is to do precisely the opposite. Oh yes, it took precisely 25 days between Geithner's heartfelt appeal to America's idiot class last year and Bernanke's Jackson Hole appearance. We wonder if this year it will be shorter.

From The WSJ:

Dodd-Frank Has Made Our Banks Stronger

By Tim Geithner

Two and a half years ago, with our country on the edge of a second Great Depression, we met with the president in the White House to discuss whether to move in those first months of his administration to legislate fundamental reform of the financial system -- or wait until we had put the crisis behind us.

The president made two key decisions. First, he chose to move forward, knowing that the forces of opposition to reform would grow stronger as the memory of the crisis receded. And second, he asked us to write draft legislation rather than propose broad principles. The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure.

In June 2009, the administration submitted to Congress a proposal that would fundamentally reshape the financial system. It was designed to lay a stronger foundation for innovation, economic growth and job creation with robust protections for consumers and investors and tough constraints on risk-taking. We drew on ideas and insights from reform-oriented thinkers across the political spectrum.

As the Democratic Chairmen of the Senate Banking Committee and the House Financial Services Committee Chris Dodd and Barney Frank initiated negotiations on the bill, we expected backing from both sides of the aisle. Even after that proved impossible in the House, where reform passed initially without a single Republican vote, we remained hopeful that common-sense efforts would garner bipartisan backing. But senior Republican negotiators on the Senate Banking Committee were unable or unwilling to define a core set of reforms they could support. Ultimately, Dodd-Frank passed with only six Republican votes.

Where are we today, a year since the Wall Street Reform and Consumer Protection Act was signed into law?

By almost any measure, the U.S. financial system is in much stronger shape, not just relative to the depth of the crisis but also relative to conditions that prevailed before it hit.

We have recovered most of the investments the government made to put out the fires and avert disaster. While many misperceive the investment made in banks under the Troubled Asset Relief Program as an unfair and unjust gift to the financial sector, we have already turned a profit on these investments, and we may do so on all the government intervention programs. Moreover, these actions have helped to restart economic growth, increase the value of American families' savings by trillions of dollars, make it possible for businesses to borrow again, and prevent a second Great Depression.

All financial crises are caused by too much leverage, and by reducing leverage, we have taken the most important step toward diminishing the risk of future crises. We have forced the largest financial institutions to take less risk and to hold much stronger financial cushions against the commitments they make. Our banking regulators have reached global agreement on new capital standards that require the world's largest financial firms to hold roughly three times more capital relative to risk than before the crisis.

And for the first time, we have the ability to extend these types of limits on risk-taking to firms that may not call themselves banks but could still pose catastrophic risk to the economy were they to fail.

The Securities and Exchange Commission, the Commodity Futures Trading Commission and the banking regulators have outlined the major elements of reforms to bring oversight, transparency and greater stability to the $600 trillion derivatives market.

The Federal Deposit Insurance Corporation has developed new tools to safely unwind or break up large nonbank institutions that fail in the future, without exposing the taxpayer to any risk of loss. This framework, together with the tougher capital requirements, derivatives reforms, and the limits in the law on future bailouts will make our system more resilient in crisis. They will also help curb the expectation that taxpayers will in the future step in to save the financial industry from its mistakes.

The Consumer Financial Protection Bureau has already proposed new ways to simplify disclosure of mortgage and credit-card loans so that consumers can shop for the best terms and be protected from abusive and predatory practices. And the president has selected former Ohio Attorney General Richard Cordray to serve as the bureau's first director, building upon the powerful legacy that Prof. Elizabeth Warren has established in setting up the agency.

Finally, we have started the process of winding down Fannie Mae and Freddie Mac and reforming the overall mortgage market.

We are implementing reform quickly but carefully, and we are taking public input at each step of the way. Because this is complicated work, and because it entails extensive coordination with multiple agencies around the world, some rules are being written more quickly than others. Where we need more time to get the substance right, we will take the time we need.

There is still a great deal of work to do to repair the damage caused by the crisis, and to implement the full framework of reforms. Ultimately, success will depend on making sure that we can write sensible rules that promote the health of the broader economy instead of the interests of individual firms -- and that those charged with enforcing these rules have the resources and the talented people they need to do their job.

As we move forward, however, many of those who fought reform during the legislative process are now trying to slow down and weaken rules, starve regulatory agencies of resources, and block nominations so that they can ultimately kill reform.

We will not let that happen. Too many Americans are still suffering from the pain of the financial crisis. We owe them a financial system with better protections against abuse and catastrophic risk. As secretary of the Treasury, I will recommend that the president veto any legislation passed by Congress that would undermine these vital financial protections.

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MobBarley's picture

Anything about how in 2003 Bush Jr told Greenspan

to go around telling all the banks to lend like crazy to support the

decaying economy because of the outsourcing by Clinton

through the false housing boom resulting in 60% of all jobs in

"America" being directly or inderectly supported by housing loan

money and how the banks need not worry because they would all be bailed out?

And as an aside, can we get at least a mention of how Bush Jr's

first act as pResident was to sign into law that any and all high paying

Tech jobs could be sent overseas saving the cost of H1B Visa's and

importation of Indian and Pakistani monkeys to the country?

As a further aside, can someone mention that Jeb Bush being

Governor of Florida during the 'hanging Chad' fiasco was just

ever so slightly a conflict of interest regarding investigation of

the

 

oh nevermind. It's not like any of you don't know this shit is rigged.

 

AssFire's picture

Hey Mob,

I think it is spelled "Amerika" now.

Anyway, Welcome Back!..  I guess you been hanging with Ted Williams' frozen head the last 8 years?

ElvisDog's picture

It's time to move on from the 2000 election perhaps? Yeah, that 2003 Bush-Greenspan conversation is a burning issue in 2011.

RoRoTrader's picture

The Securities and Exchange Commission, the Commodity Futures Trading Commission and the banking regulators have outlined the major elements of reforms to bring oversight, transparency and greater stability to the $600 trillion derivatives market.

 

$600 Trillion derivatives market.

 

$600 Trillion derivatives market.

 

$600 Trillion derivatives market.

RoRoTrader's picture

 

Nice how Geithner slipped the $600 Trillion into the discourse to nobody.

 

tip e. canoe's picture

yeah, real nice.

-- 600,000,000,000,000 --

wow, look at all those zeroes.

Popo's picture

Exactly:  $600 TRILLION.  

And when we actually achieve "transparency" on that $600 Trillion derivatives market,  we will all get to look through the window at the ultimate horror show of $600 trillion worth of toilet paper wrapped around a core of pure bullshit.   And then what?

The house of cards is so impossibly cosmic in scale that there is no possible way to "regulate" it.  

There are only two possibilities:  It can get bigger and remain opaque, or implode via attempts to make it transparent.    ... And the former will ultimately necessitate the latter anyway.

 

 

 

 

 

 

66Sexy's picture

i dont think this is junk.

gangland's picture

welcome to the pain bichezzzzz ® ™ ©!

perchprism's picture

"The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure".

 

Jesus Christ.  The Dem's were totally in power.  

DosZap's picture

Ding,Ding, Ding!!!!!!!!!!!!!

You sir are 100% CORRECTOMUNDO!!!.

Not to mention, that Bush Jr, and Ron Paul, not only once or twice, but numerous times told Frank & Dodd that the loans being made thru FM/FM, were getting VERY risky, and to REIGN them IN.

 

Did they?.

Hell no.

 ( O.T )..........just like Katrina,five days before land fall Bush Jr. called the Governor, and Mayor Nagin..........telling them to get their PEOPLE OUT.

Did they listen?, Hell no.

Who got the BLAME for slow response?.

Don't get me wrong, I am NO fan of Bush Jr.,but let's call a spade a spade.

Truth hurts...............

IF they had listened to sound advice, the disaster in N O, would have been minuscule compared to what it was, in terms of human suffering.

The answer is obvious.

louisianagold's picture

Most of those who remained during Katrina were those who rely on the government for all.  Warnings were there days in advance.  These people will never lift a finger to help themselves.

centerline's picture

Welfare state.  If the SHTF in any big way, that is were we are headed on a grand scale.

WestVillageIdiot's picture

Compare the readction in New Orleans to the typical reaction to awful weather disasters in the Midwest.  Night meet day.  The welfare culture has created the, "I can't do shit for myself, and I won't do shit for others" culture. 

AssFire's picture

I'm begining to think all this is directed to those who do not have the Neanderthal DNA update 2.0 patch. And that is Racist!

tip e. canoe's picture

perhaps...but i happen to believe that epigenetics is equally as important as genetics, and no matter who's right & who's wrong, one thing is certain -- the kids are losing...

JW n FL's picture

Tip I luv Ya Bro.. BUT!

 

"I Love how the Big Money Koch Brothers put together these high dollar productions showing only the worst of the worst.. out of 500 people at the Hotel 4 maybe 5 idiots ruin everything for everyone else? But it is the Union's? I wish the Union's would spend some Money following around the Koch Brothers!"

 

That was my YouTube Response!

JW n FL's picture

http://www.youtube.com/watch?v=xd9OYJMX9t4

 

Tea Party..

 

Big.. NO! Huge!! Money! Koch Brothers Money, Baby!!

 

Spin anything so they can have no environmental laws put into place.

 

All we can do is Pray for "We the People" Wake Up! and decide they prefer Freedom over some Lobby Whore or some Lobby Whores Owner.

tip e. canoe's picture

you're such a hippy JDub ;~)  you're right though, best to look at all angles when viewing a piece of propaganda.   but isn't that the overriding theme these days?   the idiot 1% always ruin it for everyone else.   why is that you think?   been trying to wrap my head around this one lately, not yet successful.

Are you kidding's picture

What do you expect from niggers?

nmewn's picture

I can't decide which is more offensive, Timmy's musings of his complete innocence in the whole sordid affair or his heralding consumer protection under a law named Dodd-Frank.

Both are a slap in the face.

mayhem_korner's picture

As a rule, avoid using "Frank" and "protection" in the same dinner conversation.  It's just brings up too many disturbing images...

AssFire's picture

I love it when people use:  "to be honest with you" in the midst of conversation.

I begin to think: 'you mean everything else you said might not have been true?...and,- I invested my money with you??!!

sullymandias's picture


"The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure".

Jesus Christ.  The Dem's were totally in power.

Oh! I thought he was talking about banker lobby influence..

sullymandias's picture

 

"The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure".

Jesus Christ.  The Dem's were totally in power.

Oh! I thought he was talking about banker lobby influence..

 

buzzsaw99's picture

he sounds like oliver twist begging the sheep to buy bank stocks.

Please, sir, I want some more...

hey turbo: don't cry into your gruel lulz lulz lulz

WestVillageIdiot's picture

After he leaves the disaster behind him at Treasury he can start playing the part of Fagan on Broadway.  "It's a hard naught life......for me"

kaiserhoff's picture

One thing you can say for the entire Obama Crew.  They all have piss poor timing.

RockTime's picture

TG is as incompetent as the rest of the so-called "government" -- why waste ink on him in this blog, especially on his meaningless musings in press?

Fazzie's picture

  Little Timmah flip flopping from touting a rigged fake recovery to assuring the sheep there is no need to panic.

  Priceless.

IQ 145's picture

 It's just so special when the Treasury Secretary tells you "not to panic". Oh, brother. passport, Check. Airline ticket, open, check. New Zealand, no entry visa required, check. don't panic. that's what they tell you just before the sound sputters and goes off.

B9K9's picture

New Zealand? Try Canada. One day's driving distance for about 50% of the US population. (Cranking, Indy style.) A 1% movement of US residents (3m) equates to a 10% hit to Canada's support infrastructure. (Their total population is less than California's.)

I specked it out last year; Canada will be the new Texas. Sheer free market mayhem - and the Canadian government won't be able to do a thing. Not that they'll want to. Look to California to portend the future - politicians & businesses love, love immigration. All those new constituents to be representing, you know, and all those new housing tracts & infrastructure projects (power, water, sewage, transport, etc.) to be building to house all those refugees.

A little OT: Does anybody recall 2, 3 years ago the lament that no one understood what was occurring? Or the claim that Bernanke didn't know what he was doing (LOL)? Or that the general public thought that those who did understood where 'gloom & doomers"? Anybody get that kind of pushback anymore? Not me. Shit, I've got people volunteering all the time about what they think is going down.

Once the politicians lose the will of The People, it's all over except for the crying. Prepare my brothers, prepare. The real show is going to be starting any day now. (Btw, I still think one of the generals, indeed, perhaps Petraeus, is going to have to execute the foreign & domestic enemies clause.)

In my fantasy, I imagine the order going out to round up around 10,000+ bankers and assorted criminals, including our current crop of "leaders".

JustPrintMoreDuh's picture

All together now ... QE3, QE3, QE3!!!  Yes we can!

LongBalls's picture

QE is T minus 5,4,3,2,............

SwingForce's picture

"The Securities and Exchange Commission, the Commodity Futures Trading Commission and the banking regulators have outlined the major elements of reforms to bring oversight, transparency and greater stability to the $600 trillion derivatives market."

Gotta watch that INSIDE JOB movie again, I think I misunderstood something.

cosmictrainwreck's picture

$600 TRILLION (bitchez). Oh, btw, Steve Liesman says "derivatives serve a very valuable function...." (SquawkBox 7/18/2011)

island's picture

Yeah - the derivatives market serves to keep "TBTF" alive and well. 

Shuck this fit.

tom a taxpayer's picture

The first sign of reform would the day we see Geithner, Hank Paulson, Bernanke, Blankfien, banksters, Wall Street capos, and Congressional and Executive branch co-conspirators arrested, handcuffed, and perp walked into jail for the greatest financial crimes in U.S. history.

Eireann go Brach's picture

Wee Tim needs to be gang raped by Bwarney Fwank, his boyfriend and 2 gerbils for all the lies and worthless work he has done since entering office!

JustPrintMoreDuh's picture

I dont think he would get that message (i.e. punishment)

mayhem_korner's picture

Declare victory and go home.

Get outta Dodge.

Exit stage left.

(Black) swan song.

Dead cat's been tossed.

I'm not going to stand here and let you bad mouth the United States of America!

Yours, Timmay

 

 

 

nmewn's picture

"All financial crises are caused by too much leverage,..."

And your job at the NYFR was to supply that leverage wasn't it Timmy?

 

Raynja's picture

All financial crises are caused by too much leverage, and by reducing leverage, we have taken the most important step toward diminishing the risk of future crises. We have forced the largest financial institutions to take less risk and to hold much stronger financial cushions against the commitments they make.....And for the first time, we have the ability to extend these types of limits on risk-taking to firms that may not call themselves banks but could still pose catastrophic risk to the economy were they to fail.

 

 

but not when it applies to the .gov or the fed

 

 

thanks timmay!!! i needed a good laugh

mayhem_korner's picture

...and by reducing leverage, we have...

...we have forced the largest financial institutions....

And for the first time...[in my adult life...?]

 

DANGER, WILL ROBINSON! DANGER!

Lucius Cornelius Sulla's picture

So tell me, how does anybody really know how leveraged the banks are when nobody knows the true value of the collateral on the non-performing loans? 

mayhem_korner's picture

Remember, we're in Timland.  No need to bring in that GAAP or fair valuation stuff.  Ponzi on, Garth.