Geithner Doubts Government’s Competence

This is the third in a series on The Big Bailout (Now called the “troubled Asset Relief Program” or TARP) and Treasury Secretary Geithner’s meeting with the Congressional Oversight Panel.

During his meeting with the Oversight Panel Secretary Geithner gave strong assurances that he and his bureaucrats could manage the whole economy, would eventually “think through” incredibly complex issues, and finally develop workable processes and standards, more than seven months after the government began handing out Billions of TARP dollars.

But then, after the Oversight Panel meeting, he spoke at another event where he was asked about the latest Treasury Dept. scheme, a plan to form partnerships with private investors to buy the bad mortgage assets from the banks.  The deal, as announced, requires the private investor to put up only 7%, with government loans and guarantees compiling the remaining 92%.

Why, Geithner was asked, were private investors necessary?

Instead of quoting his answer, we provide this 83 second video in which Geithner expresses – with some considerable passion – his belief that the same government bureaucrats and regulators he claimed were ready and able to manage all the banks and “the whole economy,” were incapable of determining the value of groups of mortgages and would, without the participation of private investors, “substantially overpay.”

2 Comments so far

  1. thousand flowers blooming on April 28th, 2009

    I sort of agree that private investors are unnecessary. The government should buy these mortgages at their current value, which is the price of the house. If that value is less than the borrower owes, then the borrower ought to get a break.

    Bringing in private investors means no breaks for the hard pressed homeowners who can’t make high payments on a mortgage that’s tens of thousands more than the house is worth.

  2. Chuck on April 29th, 2009

    What this blog doesn’t understand is the crisis, created by Bush deregulation, that President Obama inherited.

    There is no option to do nothing. We have to act or we’ll have another depression, even worse than the last one.