Where is the new thinking?
With all due respect, I (Jeff speaking) don't think Tim Geithner gets it. Nor, apparently does the market think he gets it, as the Dow began to tank (losing almost 400 points) as soon as the new Treasury Secretary started outlining his plan for economic recovery today.
According to Stephen Labaton and Edmund Andrews's page-one piece in today's NY Times ("Geithner Said to Have Prevailed on the Bailout"), Geithner opposed placing tighter curbs on executive pay, didn't endorse directing how the banks would use the bailout money, and refused to challenge the retention of current management -- the brilliant folks who brought us this mess.
The Times article also said Geithner "expressed concern that too many government controls would discourage private investors from participating." And, the Times piece indicates that not everyone in the President's office agreed with Geithner's approach, specifically David Axelrod, who "did not deny that there were differences of opinion as the policy was being crafted or that he had taken a harder line on issues such as executive pay restrictions, as other participants to the discussions recalled."
Obviously, we are not privy to conversations in the White House but, along with millions of other Americans, we too experience the effect of every decision made regarding the economy--and thus care deeply about the choices Geithner is making.
In announcing the plan today, Geithner said he would restore "lost faith" in the bailout. Instead, he apparently did the opposite. His plan unsettled precisely the group he didn't want to offend, private investors. No thank you, said the market.
In a word, what Geithner doesn't get is trust.
We have been following the TARP (Troubled Assets Recovery Program) saga on our site and here on the blog since the program began in October, 2008. Likewise, we've created an OrgScope overlay of the Act I TARP and related programs on our map of the US Government. From the beginning, we said it was all about "transparency for trust," which we titled our online essay about this subject. We have written numerous posts on the subject.
Trust is not a nice to have. It's a need to have. The Obama plan needs to restore trust for private investors, for the American public, and for a Congress that will be asked to come up with billions and probably trillions more before this is over.
And the only route to trust is transparency. Sunlight. Geithner's plan thus far offers little in this regard.
-- Jeff Stamps
