(Community Matters) Good conversation about populist uprising against Geithner and financial institutions. I’m not unmindful of what treasury helped us avoid. And in a world Wall Street certainly understands, what have they done for us today? We need a hard-nosed leader who will see us through to tough new financial regulations and not abide the ridiculous bonuses and return to past overly-leveraged, unregulated practices.
Most don’t want a Fed politicized, and there’s a crisis of confidence which can only be resolved by strong leadership and transparency. posted from my blackberry
Update: I especially like Prof Brandl’s comment:
Eugene – the key question to ask is: why are the banks paying all of these bonuses and yet many (small business and consumers) can not seem to get access to credit? The answer is the system that has now been set up encourages banks to borrow from the Fed at near zero rates and bring these funds to the commercial paper & currency markets and earn nice returns with defacto zero default risk. Thus, by not considering the longer term objectives of policy changes we have mis aligned incentives in the financial markets.
Community Matters 
But did you see David Brooks’ op-ed column in the NYTimes today? He surprised me by speaking very approvingly about Geithner, saying that Geithner (a) got it right and (b) did what he said he would do!
Eugene – the key question to ask is: why are the banks paying all of these bonuses and yet many (small business and consumers) can not seem to get access to credit? The answer is the system that has now been set up encourages banks to borrow from the Fed at near zero rates and bring these funds to the commercial paper & currency markets and earn nice returns with defacto zero default risk. Thus, by not considering the longer term objectives of policy changes we have mis aligned incentives in the financial markets.
Don – this is what Brooks misses in his article. Just because the banks are earning massive profits does NOT, in fact, mean the policy has been a success. Geithner’s “plan” has done little to solve the underlying causes of the crisis. Thus, we may limp to a recovery, but because of Geithner’s policies we are most likely setting ourselves up for even a larger, more expensive, banking crisis in the future.
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