Needlenose

From the Washington Post this morning:

U.S. to Wind Down Help for Some Banks

Stress Tests Find Most Can Absorb Losses

The government signaled yesterday that its financial rescue efforts may have reached their high-water mark, announcing that the much-anticipated “stress tests” of 19 large banks showed that only one, GMAC, was likely to need additional taxpayer aid and that it would begin to unwind assistance for the healthiest firms.

Despite a deepening recession and projections that banks will continue to lose money, the government will require the firms to increase their combined capital by as little as $9.5 billion. [. . .]

From the Onion earlier this week:

Nation Ready To Be Lied To About Economy Again

After nearly four months of frank, honest, and open dialogue about the failing economy, a weary U.S. populace announced this week that it is once again ready to be lied to about the current state of the financial system.

Tired of hearing the grim truth about their economic future, Americans demanded that the bald-faced lies resume immediately, particularly whenever politicians feel the need to divulge another terrifying problem with Wall Street, the housing market, or any one of a hundred other ticking time bombs everyone was better off not knowing about. [. . .]

I’m just sayin’…

Reading an article about Wells Fargo Bank reporting record profits amid the financial industry’s meltdown (and resulting bailouts), Matt Yglesias snarked:

Banks are in terrible shape, and as a result of that the government is taking drastic steps to help banks out. And it’s because of those drastic steps that the banks are posting operating profits. . . .

. . .  It would be a bit as if the government decided to save GM by just agreeing to purchase cars as fast as GM can make ‘em.

Apparently, Matt has a more or less direct line to the White House these days, since Reuters (among others) reported soon afterward:

President Barack Obama, saying he was committed to a strong U.S. auto industry, announced on Thursday the government would buy 17,600 new fuel-efficient vehicles from ailing American automakers by June 1.

Obama said the vehicles, part of the U.S. government fleet, would be purchased from General Motors, Chrysler and Ford, all of which had an existing contract with the federal government’s General Services Administration.

Talk about the power of bloggers! I guess those stories about connections between the Center for American Progress and the Obama administration were right on target.

Josh Marshall caught this snippet in a Politico article on the meeting between President Obama and the CEOs of major banks last Friday:

“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.”

But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation and offered a blunt reminder of the public’s reaction to such explanations. . . .

“My administration,” the president added, “is the only thing between you and the pitchforks.”

It’s a nice quip, demonstrating the commonsense grasp on things that appeals to many of us who voted for Obama. But many of us are also concerned that such clear thinking has gotten lost in translation between the president and his top financial appointees’ plans to deal with the current meltdown. A joint profile of Treasury Secretary Tim Geithner published last night by ProPublica and the Washington Post gives a vivid example:

In September 2005, Timothy Geithner made one of his most visible moves as a supervisor of the U.S. banking system. He summoned the nation’s top financial firms and their regulators to streamline an antiquated system that threatened Wall Street’s boom.

. . . Geithner’s summit, held at the New York Fed’s fortress-like headquarters near Wall Street, was a success. By fall 2006, the new system had all but eliminated the logjam, helping derivatives trade more efficiently.

. . . Although Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued. . . .

. . . Looking back at his time at the New York Fed, Geithner said: “I wish I had worked to change the framework, rather than to work within that framework.”

That same sense of caution seems to have afflicted Obama and his economic team to date, as they resist calls for bolder action and treat the banksters who created the current mess as delicate, yet powerful interests who mustn’t be spooked — to the extent that Obama compared them to suicide bombers a couple of weeks ago.

This isn’t the first administration to feel intimidated, and its ambitions constrained, by the perceived power of Wall Street’s reaction (anyone remember James Carville’s famous quote about wanting to be reincarnated as the bond market?).

But in a moment of such importance, I can’t help but ask: Mr. President, why are you standing on that side of the pitchforks?

(Cross-posted at Firedoglake.)

(CEOs Kenneth Lewis of Bank of America, Richard Davis of U.S. Bancorp, John Mack of Morgan Stanley and Vikram Pandit of Citigroup, among others, in front of the White House on Friday, via the Wall Street Journal.)

(Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke preparing to testify before Congress this morning, via the Associated Press.)

Back in September when Shrubya warned of economic doomsday if we didn’t immediately give $700 billion to the financial services execs with no-strings attached, Fubar smelled a rat.

Surely, our money is being put to good use?  Apparently, getting an accounting for the tens of billions spent to date is strictly on a need to know basis. 

However, rest assured that at least those poor financial services execs aren’t suffering!  Collectively they’ve received $1.6 billion in compensation for their stellar work:

Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found.The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines.

See?  Knowing this, doesn’t it truly feel better to give than to receive?

*Update* Sadly, you won’t get the chance to tell any of these pillars of our financial services community how happy you are for them in a chance airport encounter – your tax dollars are still supporting their fleet of private jets.