I worked for Gerry Corrigan at the FRBNY. On his worst day, even after one of those early breakfast meetings at Brady’s with the folks from bank exams, Gerry Corrigan could run rings around Geithner.
Corrigan began his professional life as an economist, but learned enough about finance and particularly the issues in the back office to be credible.

Trouble is, today the converted economists like a Corrigan or Susan Schmid Bies, for example, are completely outmatched by the issues of the day. Instead of the sublime questions of economic policy, we now need people who understand how to not only run a bank or dealer, but how to take one appart in bankruptcy.

How about Herb Allison? How about Sheila Bair? I’d even take Peter Fisher from Blackrock.

The basic problem with Geithner is that he is a minion of the corrupt group of people who have been running US economic policy for almost two decades. Rubin, Summers, et al. These folks are going to be incinerated in the next year as this crisis goes into outright meltdown. Not only is Geithner unqualified to deal with this situation, but he is going to be the first one thrown under the bus!

To paraphrase a man who we are featuring in The IRA next week, Geithner and/or Ben Bernanke could be the next Danny Wall. Stay tuned.

Chris

And by the way can we all agree that Ben Stein has been so wrong for so long as to now be thoroughly discredited?

Speech at the FRB Philadelphia: Venezuela Under Chavez: Socialist Construction and National Chaos
http://www.rcwhalen.com/research/GIC_VE.html

Chris

There was some unreservedly good consequences that came out of letting Lehman go; the fear that serves as the motivation behind moral hazard was reinforced — and it only takes a few actual disasters to make people a lot more cautious. I suspect that ALL portfolio managers are a lot more vigilant about getting the junk out of their portfolios now than they would be if Lehman had been bailed out along with everyone else.

Poor results do effect corporate leaders, if the corporation they are leading is vaporized as a consequence.

So much theory and rhetoric, but do you have the numbers and model to back up your points? What do you suppose would have occured next had Bear just gone down? I want to understand if there is actually some evidence behind the bold assertions above. Or is it all doctrine and indignation?

So far, not one big credit card company has gone down for the count, and the fallen banks for the most part have not impaired their depositors.

Is this to the good or to the bad? Time will tell. In the short term, as weak as this shopping season is, I can imagine that it could have been far, far worse if we had serial bankruptcies at the more public-facing banking institutions. And then so many other perfectly decent businesses would have been ruined.

Is it possible that any good could have come by winding up (outlawing) CDS while saving the institutions, and was there a way to accomplish this?

Finally, moral hazard. Please–this concept is indeed quaint because poor results over time don’t necessarily affect corporate leaders, who earn their keep according to the short term results of their stock. Nor do long term results influence money managers, who keep their jobs on quarterly and annual results. We’re a long, long way from Kansas, Dorothy.

We need more bailouts. If you risk and win, you get rich. If you risk and lose, you go bankrupt. That is how it works. Anything else is socialism … or worse.