This administration’s crony capitalistic economic team and its urge to interfere in the market to right any perceived wrong never ceases to amaze me because they are oblivious to the possibility of unintended consequences of their actions and their sheer arrogance.
A case in point was legislation passed by last year’s Democratic controlled Congress and championed by U.S. Treasury Secretary Timothy Geithner, which puts a limit of $0.21 on each debit card transaction that a bank can charge a retailer. The previous average before the legislation was $0.44. The banks have shareholders to answer to and are not in business out of sheer altruism; they have every right to institute fees to earn money.
In a recent interview, Secretary Geithner said he would not allow these new bank fees to stand and seemed surprised that the banks would pass on the costs of losing part of their revenue stream from the retailers to their customers. I am personally appalled that a Treasury Secretary would have the arrogance to make such a statement. He’s attacking the free market, but it was the interference of the Federal Government that led to this situation in the first place.
After all, Mr. Geithner has a dismal record for the unintended consequences of Federal Government interference in the market place. During his previous position as President of the New York Federal Reserve, theNew Yorkinstitution took over negotiations in October 2008 between an ailing AIG and several banks as losses of its credit default swaps tied to subprime home loans threatened to sink it just weeks after its taxpayer rescue.
The Fed decided that more than a dozen financial institutions (including Goldman Sachs) should be fully repaid for more than $60 billion of these swaps. Correspondence from Robert Benmosche (AIG CEO) that October reported that the New York Fed instructed AIG not to negotiate discounts for settling the swaps. This decision to pay these institutions in full may have cost AIG and taxpayers approximately $13 billion.
The secretary’s ability to effectively forecast, even in the short term, is non-existent.
This was evident when asked during an interview in April of this year whether theUnited Stateswould have its credit downgraded, he proclaimed “No Risk.” I guess this shouldn’t surprise anyone coming from a Treasury Secretary who oversees the IRS when he was incapable of correctly filing his own taxes.
Timothy Geithner should never have been appointed as Treasury Secretary, nor should anyone that was involved with the Federal Reserve Bank during the economic crisis of 2008 or the time leading up to it. Mr. Geithner is the poster child for what is wrong with both parties and their incestuous relationships with the financial industry. Most of the President’s appointees on his economic team come from the financial institutions that benefitted from TARP and the subsequent financial bailouts.
The Federal Government should not be picking and choosing winners and losers in the economic marketplace. The role of the Federal Government should be limited to providing and maintaining a stable currency, protecting commerce and enforcing contracts. But Progressive economic policies over the last few decades have distorted its role.
Its time for Mr. Geithner, to go and take all the crony capitalists of this administration with him.
Just my opinion, D.B.