Geithner was sworn in shortly after 7:30 p.m. President Barack Obama attended the ceremony, Vice President Joe Biden Administered the oath of office.
(AP Photo/Ian Barrett) Timothy Geithner, the New York Federal Reserve Bank president whose failure to pay tens of thousands of dollars in taxes threw his nomination as Treasury secretary into jeopardy, was today confirmed for the job by the Senate.
The vote was 60-34. Geithner earlier cleared the Senate Finance Committee with an 18 to 5 vote; one of the dissenters, Mike Enzi, said that "in previous years, nominees who made less serious errors in their taxes than this nominee have been forced to withdraw."
The Obama administration backed Geithner despite his tax problems, however, and consensus formed in Washington that the country's economic problems were too significant for Geithner's "careless mistakes" to derail his nomination.
The 47-year-old is seen by many as the best candidate for the job, and there was concern that rejecting him would mean a delay in confirming a replacement that the country could not afford.
"The economic situation is so tense right now and I don't want see us go back to square one and wait several weeks or longer for the process to bring in a new treasury secretary," Republican Sen. Arlen Specter said today, according to the Associated Press, in explaining his support for Geithner.
Treasury Aims To Keep Lobbyists Off TARP WASHINGTON, Jan. 27, 2009 (CBS/AP) Treasury Secretary Timothy Geithner, in his first full day on the job, announced new rules Tuesday to limit special-interest influence on the government's $700 billion financial rescue program.
The new rules are designed to crack down on lobbyist influence over the rescue program and make sure that political clout in not a factor in awarding rescue money.
Obama administration officials said they go farther than the lobbying rules imposed by the Bush administration and are designed to ensure that bailout money is distributed with the goal of promoting the health and stability of the financial system. "American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system," Geithner said in a statement. "Today's actions reaffirm our commitment toward that goal."
Treasury's new rules restrict the contact officials can have with lobbyists in connection with applications for funds from the bailout program. The new restrictions are modeled on the limits that are imposed on political lobbying of Treasury Department officials on tax matters.
TARP Panel Report Cites Regulatory Failures In Crisis
Posted By: Albert Bozzo | Senior Features Editor CNBC.com | 29 Jan 2009 | 08:27 AM ET
The Congressionally-appointed panel overseeing the TARP program today will release a stinging report of the regulatory failures that led to the current financial crisis.
A copy of the draft report, which will be presented to Congress, was obtained by CNBC.com.
“The regulatory system not only failed to manage risk, but also failed to require disclosure of risk through sufficient transparency,” the report concludes.
Among the report’s recommendations are that future regulation include better oversight of systemic risk, reducing the potential impact of “too-big-to-fail” institutions; improved transparency through “better, more accurate credit ratings” and better regulation of consumer products, which would “curb excesses in mortgage lending.”
The panel’s report also calls for the creation of executive pay structures “that discourage excessive risk taking.”
The panel was created under the Economic Emergency Stabilization Act, which was signed into law in October and authorized the Treasury to spend up to $700 billion in propping up the financial system.
The panel, known as COP (Congressional Oversight Panel), is headed by Harvard University professor Elizabeth Warren, who has been consistently critical of the TARP program’s administration under former Treasury Secretary Henry Paulson.
The 78-page report includes so-called “alternate views” from one panel member, which include making the Federal Reserve the “systemic regulator.”
Sell-off manipulation for coming Hedge Fund Regulation ~ Obviously markets sold off to spite TS Geithner. The sell off was ruthless so markets must be expecting "tight control" regulation for Hedge Fund industry. Unregulated hedge fund industry is ruining our economy, many people wealth, and nation's wealth with massive financial wealth drain with colluded funds as well. ___________
Did Sell-Off Create Trading Opportunity? Posted By: Lee Brodie | Web Editor CNBC staff and wire reports | 10 Feb 2009 | 05:39 PM ET
LACK OF DETAILS IN RESCUE PLAN DOOM MARKET
The Dow fell sharply on Tuesday after Treasury Secretary Tim Geithner rolled out a reworked financial rescue plan but did not provide enough details to satisfy investors.
Wall Street was hoping to hear specifics about how to mop up bad bank assets and revive consumer lending.
Main Points Of The Geithner Financial Stability Plan
1. Public-Private Fund to Buy $1 Trillion in Toxic Assets 2. Additional Capital for Banks 3. $50 Billion to Prevent Foreclosures
The Problems
1. Vague: Which Banks Get What? 2. Vague: Which Homeowners Get What? 3. Nationalizing the Losses, But Not the Profits? 4. Private Capital Has No Idea What the Plan Is
With the Geithner plan triggering more questions than answers, investors once again turned to the flight to quality trade -- and bid gold and Treasuries higher.
Considering the steep drop in financials, should you buy bank stocks on the dip?
The Fast Money Trades
If you want to play financials look at the book value of Wells Fargo versus JP Morgan , counsels Pete Najarian. Wells Fargo is still trading above its book value and JP Morgan still trades at a big discount. Consider a pairs trade, he says. And look at Visa and Mastercard . They’re not really affected by the new TARP.
In the materials space nothing has changed since yesterday, adds Tim Seymour. I see the underpinnings of increased demand in the space.
I think the sell-off presents an opportunity, says Guy Adami. I would look to Intel on the dip or even Bank of America as a trade, he says.
Bank stocks are trading vehicles only, reminds Jeff Macke. If you go to bed with Bank of America you’ll wake up with fleas. If you want a trade buy Morgan Stanley on the dip. Otherwise let things come back to you.
Musings From The Fast Money Traders
A centerpiece of the TARP now renamed "Financial Stability Plan" is a proposal to set up a public-private investment fund, in partnership with the Federal Deposit Insurance Corp, a bank watchdog, and the Federal Reserve, the U.S. central bank.
The traders like the concept but don't understand how the government intends to value toxic assets.
Private capital will bid on anything if they can figure out a way to price it but the plan has no way of pricing anything, says Jeff Macke’s. That’s what sent the market tumbling.
I wish they’d use Morgan Stanley as a test case, muses Guy Adami. They took their lumps and they’ve come out the other side. I think the message here is that banks need to take their lumps.
I agree, says Pete Najarian. Morgan Stanley and Goldman have taken their write-offs. Those are the stocks to put on your radar. Stay away from them money-center banks
I’m concerned that in his testimony Geithner told Congress that there are banks that are too big to fail, observes Dylan Ratigan.
I think we need to allow some banks to fail, adds Macke. Ultimately, people will step in and the markets will work.
And why can’t we let the bond holders fail too, adds Tim Seymour. Bond holders know they’re taking risk and with that risk comes failure.
We’re spending too much time propping up banks that are on the brink of failure, adds Macke. We’ve got to start thinking about other industries such as the automakers.
We don’t need these banks, adds Ratigan. We just need banks. Others will do.
What I think the feds should do is put a bottom on the toxic assets, says Guy Adami. For example, for every dollar of toxic assets, price them at 40 cents and let the chips fall where they may.
To restore financial market, we need to have "Full accountability hearing on the Bush Amin" in the light of our Economic Crisis. We need to see further investigation including R.E. bubble/bust manipulations which is the crime against Americans using market manipulation.
I don't think that the CEOs are going through much pain even though those Q/A sessions are not pleasant experience. Many Americans are financially demolished because of many who abused their positions to deceive many unethically even though the actions may not be illegal. While some may have committed illegal acts, many conduct themselves unethically.
Wall Street Executives Say They're Looking to Improve Risk Management
By Amit R. Paley Washington Post Staff Writer Wednesday, February 11, 2009; Page D02
Wall Street is trying to move out of its defensive crouch.
The chieftains of eight of the nation's largest banks could receive a tongue-lashing when they testify before a House committee today, but some on Wall Street have moved to preempt the withering criticism by proposing their own solutions to the economic meltdown.
Earlier this week, Goldman Sachs chief executive Lloyd Blankfein urged tougher regulation of the financial sector and tighter limits on lavish compensation for executives. His comments echoed previous proposals by Wall Street's main lobbying association to expand oversight and regulation of the industry.
The banks helmed by Blankfein and the other seven chief executives called to appear before the House Financial Services Committee this morning received $165 billion from the $700 billion government bailout. Lawmakers are furious at the executives over accounts of their lavish spending since receiving the taxpayer funds, and have attacked them for hoarding the money instead of using it to boost lending.
"This is going to be a torture session for them; they know they are going to be pilloried, particularly by the Democrats on the committee," said Anne Mathias, director of policy research for Stanford Group, a financial services firm. "They know that they have to reframe the debate on their own terms and show that they understand the public frustration."
Analysts said the Wall Street executives are hoping to go on the offensive and embrace some degree of regulation before it is forced on them.
"For policymakers and regulators, it should be clear that self-regulation has its limits," Blankfein wrote in the Financial Times on Monday. "All pools of capital that depend on the smooth functioning of the financial system and are large enough to be a burden on it in a crisis should be subject to some degree of regulation."
Blankfein, whose firm received $10 billion in the bailout, also called for limits on executive compensation that could be more stringent in some circumstances than President Obama has proposed. Blankfein said senior executives should be paid a large portion of their bonuses in equity that they must retain until they retire. He also said it was critical that companies put a priority on reducing the risk of losses, arguing that it is necessary to prevent another crisis.
Mark T. Williams, an expert on risk management and a former Federal Reserve Bank examiner, said Wall Street has recently begun to elevate the importance of risk management as a good business practice, a trend that is typical once banks sustain enormous losses. He cited the increasing number of chief risk officers in financial firms.
"I call it the return of the nerds," said Williams, a professor at Boston University's School of Management and a consultant for Deutsche Bank. "We used to be the nerdy group that was just pushed aside into the back offices to crunch our numbers. Now risk managers are really at the tops of these banks."
Bank executives hope their adoption of risk management will soften the anger from lawmakers, according to Williams. He said it is similar to a move by J.P. Morgan in the early 1990s to develop a risk-management approach for the industry before the government did. "They were very proactive in anticipating and heading off additional regulation," he said. "They realized if they didn't develop it then regulators would."
Analysts expect that today's hearing will be much like when hedge fund managers appeared before the House Oversight Committee in the fall and, under serious questioning, agreed to support further oversight.
"I think the bank executives are going to cry uncle and finally say: We will accept more regulation," Williams said.
Blankfein's emphasis on the importance of more market oversight follows a similar proposal from the Securities Industry and Financial Markets Association.
"Today no regulator has a 30,000-foot perspective of the system," group spokesman Travis Larson said. "A financial markets stability regulator with oversight of systemically important insurance companies, private-equity firms, hedge funds and other financial firms is absolutely key to building a stronger, more robust and resilient financial system."
Spokesmen for the eight executives appearing today declined to comment or did not respond to requests for comment.
But in previous statements, the executives have tried to strike a careful balance between acknowledging the need for more regulation and being reluctant to have rules stifling innovation. In a speech last year, Citigroup chief executive Vikram Pandit said there was a need for better regulatory oversight of systemic risk.
But he quickly added: "This doesn't mean deluging oversight agencies with data. That serves the opposite goal. We need transparency with a purpose."
The market manipulation and fight with the Obama admin.
Markets down 7 days in a row -- selling off 12.50% since the Geithner speech. It seems that the hedge funds are fighting against the Gov as well because the Gov is planning to regulate the industry.
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