What is important to understand is that bankers don’t give a flying fuck about banks. They care about bankers. This is why banks are collapsing one after another. Especially the big invesment banks such as Merrill Lynch, Citigroup, Lehman Brothers and USB, While this may seem contradictory let me excplain in short how that is possible. Once banks where owned by a banker. It was in his interest to be prudent to whom he loaned and how he maintained his business. If he failed he went bankrupt. This is how it works:
I’ve previously pointed out that the head of Obama’s council of economic advisors – Larry Summers – is the worst possible guy for the job.
Two new articles show why Tim Geithner is the treasury secretary from hell.
As Robert Kuttner writes:
Geithner has … come up with the idea of subjecting the largest banks to “stress tests” to determine just how badly damaged their balance sheets are. This has been advertised as government examiners crawling all over bank records, but much of this belated effort will rely on the banks’ own risk models–the same risk models that got the banks into this mess.
Come to think of it, where have the examiners been all along? Why wasn’t there serious investigation of bank balance sheets all along? Why should stress tests be performed only after disaster has struck (shades of Hurricane Katrina)?
The worst culprit among the feeble regulators is the Federal Reserve Bank of New York, whose examiners are responsible for assessing the safety and soundness of the holding companies of Wall Street’s largest banks. It was high risk speculative activities by holding company affiliates that put the big banks under water.
Who dropped the ball? You may recall that Secretary Geithner, before he assumed his present post, was president of the New York Fed Bank. According to a withering feature piece from Bloomberg, he was asleep at the switch, and far too cozy with the banks. Heckuva job, Timmy.
And in his must-read piece from today, Cenk Uygar writes:
Tim Geithner and Larry Summers and many others are missing the fundamental flaw in the system. The bankers don’t care about the banks; they care about the bankers. …
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Tags: Federal reserve, Geitner, Looting, Summers
