Meanwhile, there's a lot more than bonus money being given away (TALF)

[Elidor]

Anna Burger, Secretary-Treasurer of the SEIU and one of Obama's economic advisors, on TALF:

Secretary Geithner's proposal for the Term Asset-Backed Securities Loan Facility (TALF) would enable private equity firms and hedge funds to buy up higher quality loan securitizations, including auto, consumer, student and small business loans. The Federal government would provide low-cost financing for up to 95% of the purchase price, with private firms putting down as little as 5% and the securitizations as collateral. The hope is then to expand this proposal to include toxic mortgage-backed securities.

Each of these programs could cost taxpayers up to $1 trillion. If the private firms make a profit from the deal, they keep all of it. If they end up losing money, they are only on the hook for the nickel or two of equity they put in. The taxpayers would then assume the rest of the losses. Even worse, subsidizing the purchase up to 19-to-1 will drive up the price of the assets, which would be yet another gift to the same banks that caused this crisis while at the same time putting taxpayers at a much greater risk of bearing huge losses.

http://www.seiu.org/2009/03/fire-sale-of-bank-assets-would-hurt-taxpayers-its-time-for-an-economy-that-works-for-everyone.php

You read that right: Geithner wants to re-inflate the bubble.

Ian Welsh at FDL weighs in:

Burger is right when she says that this plan will lead to yet another bubble. Ultra-cheap financing with no risk for the investors is exactly what investors thought they were getting with collateralized debt obligations. They were wrong then, but this time they'll be right, because Geithner is giving them the money. And the result will be artificially high prices, which taxpayers will have to pay off when they crash. True, this will give some relief to banks, but the cost will be much higher than it needs to be, and the problem will only be pushed onto the future, and onto the government.

This is, thus, in the end, simply another bailout. It could wind up costing taxpayers $2 trillion. Kind of makes one long for the old days when the bailout was $700 billion, doesn't it?

I confess that I find it difficult to spot the difference between the actions of the Treasury Department under Bush and Paulson, and those under Timothy Geithner. In both cases, job one seems to be to bail out bankers and give money to private investors, not to fix problems in a sustainable fashion which looks after taxpayers.

http://firedoglake.com/2009/03/16/another-giveaway-the-sad-truth-about-the-geithner-talf-plan/

Meanwhile, lawmakers are asking why Geithner didn't put a stop to these bonuses much sooner:

Miller's chagrin over Treasury's lack of responsiveness and transparency signals a distressing trend for the Obama administration. As the nation seethes with anger over lavish spending at bailed-out banks -- particularly AIG's $450 million in bonuses to the same executives who bankrupted the company -- a number of lawmakers from both parties are pointing out that Treasury Secretary Tim Geithner's team could have clamped down on the excess earlier.

And Miller is no gadfly; he has worked with colleagues on predatory lending and mortgage bankruptcy measures that have become top-tier priorities thanks to the financial crisis. He was candid in calling out Geithner for failing to fully inform Congress about his management of the bailout: "I don't feel a lot of confidence in all of this, because I don't have much idea what they're doing ... I'm a fairly conscientious member of the Financial Services Committee, and I haven't found out."

One thing Miller is sure of is that Goldman Sachs, the alma mater of Bush Treasury Secretary Hank Paulson, "had a lot of influence over" the decision to rescue AIG's counterparties (among which Goldman was No. 1).

http://tpmdc.talkingpointsmemo.com/2009/03/dem-rep-miller-interview-no-change-i-can-notice-at-obamas-treasury.php?ref=fp4

Lastly, as Marcy Wheeler noticed late last week, the AIG white paper defending the bonuses appears to be a thinly vieled threat to blow up the financial system if they don't get paid. (See her must-read column on that matter here: http://emptywheel.firedoglake.com/2009/03/15/the-semtex-in-the-aig-retention-contracts/ ). This was presented to Geithner by the very guy Geithner picked to run AIG, Edward Liddy.

Geithner is not looking very impressive as a Treasury Secretary.

[Elidor]

1. House Republicans To Force Geithner's Hand on AIG Negotiations

Have you been wondering whether Treasury Secretary Tim Geithner is leaving some key details out in the chronology of his negotiations with AIG CEO Edward Liddy?

Since Geithner knew about Liddy's plans to pay out the company's now-infamous bonuses before they became public on Saturday -- and since the bonuses have been common knowledge in the media for months -- it's worth asking how directly Treasury was involved in okaying the payouts.

But it's too bad for Democrats that Republicans are the ones seeking the information. Reps. Steven LaTourette (R-OH) and Thaddeus McCotter (R-MI) introduced a resolution of inquiry today that would force Geithner to reveal the full extent of his department's communications with AIG.

The resolution would affect not just talks over bonuses but about the very structure of the Federal Reserve's investment in the company -- which appears to have included built-in limitations on the government's influence over management.

This is the real deal, folks: resolutions of inquiry (ROIs) are a crucial procedural tool for the minority party to seek information from the executive branch. Democrats did this during the Valerie Plame/Spygate scandal and the debate over the Bush administration's extraordinary rendition. The Congressional Research Service found in a November study that ROIs oftentimes succeed in prying out information even if they fail on the House floor.

http://tpmdc.talkingpointsmemo.com/2009/03/house-republicans-to-force-geithners-hand-on-aig-negotiations.php?ref=fp1

Geithner is taking hits from all sides: AIG, congress, various economists, and the grassroots. The only place he's not taking obvious flak from is Obama. Which is a shame, because if there's one person who should be riding Geithner's ass right now, it's Obama. We have no time for incompetence.

[stillcool]

2. how is it that everyone knows..

what Obama is thinking, doing? I hope that Geithner is forced to reveal his dealings with AIG. Not only him, but the Bush Administration as well.