Banking on Geitner

Part 2 of 2

The Wall Street Journal’s September 18th article about bonuses and compensation reports that the Feds plan to curb compensation for traders, loan officers and executives on Wall Street. The front page article, talks about the new policy that endeavors to structure pay for thousands of bank employees nationwide. It is important to note that this policy will only require the approval of the Federal Reserve, not congress. Perhaps this is a good thing, considering the potential for months of bipartisan antics that would spark political debates, ultimately clouding the issue, and stalling progress.
To the question asked by one of the citizens: Given the new and deeper role the government plays in shaping our economy, do we have to reshape our Dreams? Geithner offered reassurance saying “I think the American Dream is still about freedom and opportunity”. He went on to talk about one of the reasons we had been such a productive country in the past, is that we were early in establishing universal education, the many other things that made us strong. the Secretary boasted that we were the envy of the world at one time. “That central vision is still going to be our future”. There were, of course, those questions that we've been hearing in round-table debates since the collapse of the financial market last Fall. Geithner fielded the questions with composure and confidence. One concerned citizen asked: You let GM fail, but City Bank was too big to fail? Why?: Geithner explained pension funds had already declined 30% by the time Citibank showed exposure, and also reiterated that the government failed to act soon enough. The Treasury Secretary emphasized that the American people played a role by taking on too much debt, and living beyond their means for too long. He went on to say that “you can not solve a crisis by teaching people a lesson”.


Geithner very aptly pointed out that we should be all more committed to never letting this happen again, saying “Never again commit to tax cuts without having a way to paying for them”. He went on to say we should never again finance two wars without a way to pay for them and expand health care without the money to pay for it. In response to the question asked by co-host Steve Liesman, “How much pressure are you under to dial back, and get out of the private sector?” The Secretary adamantly exclaimed “no one is going to be more eager than I am.” and he meant it. He stated that the TARP program was designed to be used no longer than necessary, adding that there are dangers to withdrawing too soon. Geithner continued saying other country’s have made this mistake in the past, which could reignite the recession and cause even more damage. The Treasury Secretary seemed to believe that the measures that were taken are working. He talked about the indications of traction and growth, citing that they already have $88 billion coming back into the treasury from TARP repayment. While predicting that unemployment will stay “unacceptably” high, Geithner stated that after two years, we now have an economy that is starting to grow, we are just at the beginning. It is going to take a while to fix this. Back to Part 1
K. Reilly
Cohn-Reilly Report
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WSJ: 9/18/09,“Bankers Face Sweeping Curbs on Pay”
http://www.cnbc.com/id/32372470