02 May 2012

Bill Black: Geithner Channels Greenspan and Airbrushes Fraud out of our Crises

Tim Geithner is a creature of the system, and no doubt a part of the problem.  But only a part. He is appointed and serves at the pleasure of the President.

The root of the problem is the pervasive corruption of American politics, intellectual discussion, and public policy by Big Money.   And a culture that tolerates a total lack of shame for the abuse of power and trust in the pursuit of personal power and gain. 

After all, greed is good.  And greed is the will to power.

And some public figures of the last twenty years, both political and financial, have been rather proud of their ability to twist words to dissemble and obfuscate, and mean whatever they wish to promote their agendas.

And the lesser leaders, the CEO's, have no problem taking enormous sums of money for superior performance, but willingly feigning almost complete ignorance of the business which they manage when it suits their purposes. Why not, when those in positions of power set the example.

When there are no significant social penalties, much less serious legal consequences, for deceit and dishonor in positions of trust, when personal integrity is not even considered important compared to wealth and power, when all are compromised so that none need even feel embarrassment, truth has no purchase, and justice is a unloved stepchild.

Geithner Channels Greenspan and Airbrushes Fraud out of our Crises
By Bill Black

On April 25, 2012, Treasury Secretary Geithner made remarkable statements about the role of elite financial fraud and greed in producing our recurrent, intensifying financial crises.

In this first installment I focus on the first of five problems with Geithner’s claims: (1) he does not understand the causes of prior crises, (2) he does not understand the causes of the ongoing crisis, (3) he does not understand that if he were correct about the first two points our nation would be in even greater peril and the urgency of Geithner leading a radical transformation of finance and regulation would be greater still, (4) he is not correct that we are prosecuting the elite criminals who drove the ongoing crisis, and (5) the media continues its nine-year pattern of failing to challenge Geithner’s fictions and his failures to lead the radical transformation that he should be desperately seeking given his stated beliefs about the causes of financial crises.

Here are the specifics of what Geithner said about financial crises, fraud, and greed.

"The wheels of justice are turning now," Geithner said at an event in Portland after touring a factory there. "They are not turning as fast as people would like, but we have the best system in the world for making sure we can enforce the laws of the land," he said.

Geithner suggested that holding people accountable for the wreckage caused by the recent housing collapse and the ensuing financial meltdown was not that simple since most crises were not caused by criminal activity.

"Most financial crises are caused by a mix of stupidity and greed and recklessness and risk-taking and hope," said Geithner, who helped tackle the crisis for the Bush administration when he was the head of the New York Federal Reserve and has been urging Europe to act more aggressively to contain its debt problems.

"You can't legislate away stupidity and risk-taking and greed and recklessness. What you can do is make sure when it happens it does not cause too much damage and to do that you have to make sure you have good rules against fraud and abuse, better protections and you force banks to hold more capital against their risk," he said...

Read the rest at Capitalism Without Failure.