Psst... Timothy Geithner never worked for Goldman-Sachs

[scheming daemons]

It has become "common knowledge" that Tim Geithner, like Hank Paulson before him, was an alum of Goldman-Sachs.


Only thing is... it's not true.

Geithner Struggles to Escape Past He Never Had

Timothy F. Geithner has been misidentified as a former Wall Street insider from Goldman Sachs so many times since he became the Treasury secretary that he and his advisers had taken to joking about it. Then the joke backfired.

Earlier this month, Mr. Geithner had breakfast in Manhattan with Mayor Michael R. Bloomberg and Robert Steel, a deputy mayor and former Treasury official in the Bush administration who had previously worked at Goldman. Facetiously, a Geithner aide said Mr. Steel and Mr. Geithner knew each other from the investment bank.

Later that day at a public event, the mayor in all seriousness referred to Mr. Steel and Mr. Geithner, and added, “They both worked at Goldman.”

Oops.
.
.
.

http://www.cnbc.com/id/38033411

There may or may not be reasons to be critical of Mr. Geithner. But let's at least please be factual. Timothy Geithner has never been an investment banker, and he never worked for Goldman-Sachs.

[msanthrope]

1. Facts? What the hell are you doing? n/t

[scheming daemons]

3. I know, I know.... why even try?

[msanthrope]

22. Kudos to you for trying. n/t

[court jester]

20. pretty sure he worked at CBS in the '60's...

[Whisp]

41. LOL!

[Name removed]

2. Deleted message

Message removed by moderator. Click here to review the message board rules.

[flamingdem]

5. You got that right! How many times has that been said on DU about Geithner?

.. then my rec was unrecced.

[Subdivisions]

31. Post was deleted. Please provide context for your comment. Thanks. n/t

[HiFructosePronSyrup]

34. I said that people who hate Obama don't care about the facts.

Apparently some anonymous person took that personally, and hit alert.

I don't know what part they took personally. The lying about Geithner part, the not caring about the facts part, or the hating Obama part.

[Subdivisions]

37. Who 'hates' President Obama? If someone is critical of the President, does that

mean that person 'hates' him?

[HiFructosePronSyrup]

38. No.

Why would you infer that is the case?

Do you think that there are no people who hate Obama?

Furthermore, do you think that people who lie about Obama's cabinet are interested in honest criticism?

[Subdivisions]

43. I'm not inferring anything. I was just asking a question. Of course, there are

people that hate Obama, I just don't think that all people who disgree with/criticize him can be characterized as hating him. I'm also referring mainly to GD as this is where I spend 99.99% of my time here.

No, I don't think people who lie are interested in honest criticism. I also don't know of anyone (again, here in GD) who purposely lie about Geithner being ex-Goldman. I think they are guilty of taking someone else's words at face value and are too lazy to do their own research. They hear it somewhere and they immediately begin to parrot what they heard.



Ed: to change "like" to "lie", Jeez! :( I really need to get into habit of using spell check...

[mbperrin]

4. No, but he was at Kissinger Associates, whose clients included Lehman.

Not exactly an outsider, either.

http://en.wikipedia.org/wiki/Kissinger_Associates

http://en.wikipedia.org/wiki/Timothy_Geithner

[tuckessee]

6. He's "working" for them right now. n/t

[whatchamacallit]

9. Bingo! +1 (nt)

[Roland99]

10. pretty much

and he was President of the NY Fed under Greenspun. This guy was part of the machinery that worked to destroy the economy with their greed.

[KittyWampus]

18. See, if the facts don't fit your narrative just find a way to cast them in a light

that works for you!

[Subdivisions]

32. Rather than snark, why not provide a substantive case as to why Geithner

should not be perceived as working in Wall Street/Goldman's best interests. I'd be very interested in such an analysis and I'm sure others would be also.

[rucky]

7. This is news to me. n/t

[Parker CA]

8. +1

[Joanne98]

11. We know that. He worked for the NY Fed.

It's probably the Republicans who think that. But they get all their facts wrong.

[Subdivisions]

33. Yep. n/t

[leveymg]

12. Not many degrees of separation. Geithner headed the NY Fed, the largest member being Goldman

The Federal Reserve Board, and its regional banks, is a trade group run by its members.

So, Bloomberg, who is a very sophisticated guy, was essentially speaking the truth.

[TheWraith]

13. No, he wasn't. That is utter bullshit.

I worked for a company that worked WITH Microsoft on occasion. That doesn't mean I worked for Microsoft. And the Federal Reserve Bank is not an industry trade group.

[Recursion]

15. Regional Feds have investment banks as "members" now?

Or, for that matter, have "members" to begin with? When did that happen?

[leveymg]

27. NY Federal Reserve & Primary Dealers run the Fed Funds & Repo market, primary liquidity channels

to the banking system. In addition to their role as traders in various markets for gov't securities, the Primary Dealers sit on committees that determine policies for the operations of the Open Market, Federal Funds Rate and Overnight Window administered by the NY Fed. The representatives that sit on these committees are referred to as "members." The Primary Dealers, large global banks and broker-dealers, are the Fed's counter-party in Open Market and Overnight Loans (short-term) operations. There are three main Open Market operations:

* Temporary open market operations involve repurchase and reverse repurchase agreements (REPO Market) that are designed to temporarily add or drain reserves available to the banking system.

* Permanent open market operations involve the buying and selling of securities outright (auctions) to permanently add or drain reserves available to the banking system.

* The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.


The Primary Dealers:

BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
RBC Capital Markets Corporation
RBS Securities Inc.
UBS Securities LLC.

In addition, there is the better known Federal Open Market Committee (FOMC) that consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The members of that group are all bankers, academics, or former heads of major financial institutions. That group sets overall policy strategy, but the NY Fed and its operating committees really runs the day-to-day operations of the big federal bonds markets.

Here is how the NY Fed describes the role of the Primary Dealers: http://www.newyorkfed.org/markets/pridealers_policies.html

Operating Policy
Administration of Relationships with Primary Dealers
January 11, 2010

The primary dealers serve, first and foremost, as trading counterparties of the Federal Reserve Bank of New York (The New York Fed) in its implementation of monetary policy. This role includes the obligations to: (i) participate consistently as counterparty to the New York Fed in its execution of open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and (ii) provide the New York Fed’s trading desk with market information and analysis helpful in the formulation and implementation of monetary policy. Primary dealers are also required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account-holders.

This policy sets the standards for primary dealers (Standards). Each primary dealer must meet the Standards, initially and on an on-going basis. All primary dealers will be expected to engage in the traditional primary dealer functions listed above. All primary dealers will also be eligible to: (i) participate in the New York Fed's overnight securities lending facility; and (ii) participate in such other operations or facilities, pursuant to their terms and as set forth in this policy, as may be available to primary dealers from time to time.1

The New York Fed continues to emphasize that the nature of its relationship with primary dealers is a counterparty relationship, not a regulatory one. This policy establishes the framework by which the New York Fed will prudently manage its counterparty risk consistent with its mandates to implement monetary policy and promote financial stability. The New York Fed also recognizes the value of maintaining transparency in its administration of its relationships with the primary dealers. In light of the foregoing, third parties are reminded that the designation of an entity as a primary dealer by the New York Fed in no way constitutes a public endorsement of that entity by the New York Fed, nor should such designation be viewed as a replacement for prudent counterparty risk management and due diligence.

Finally, some of the activities associated with the primary dealer designation are not exclusive to primary dealers. Firms that are not primary dealers are permitted, but not required to bid directly in Treasury auctions. Firms that are not primary dealers may share market information with staff on the open market desk at the New York Fed about market conditions and other useful market color.

This policy includes four sections:

* Standards
* Statistical Reports on Government Securities Activities
* Sanctions In The Event of Non-Compliance with Standards
* Application Process

[Recursion]

28. Wait. You're calling the dealers "members"?

That's almost perverse. NY Fed gives certain windows to G-S and (at least in theory) uses the carrot and stick of continuing or limiting that as a way to coerce behavior chages out of G-S.

[leveymg]

29. I'm talking about the way the NY Fed and the Primary Dealers run the bonds markets

Trading is governed by rules. Rules are made by committees. Ranking officers of the banks/brokerages and the NY Fed staff sit on the committees that make operational decisions about how the markets operate. If you sit on a committee, you're a member.

Not to be confused with the permanent and rotating Members of the FOMC.

Don't miss the larger point here, that Geithner was rubbing elbows for years with the very banks and brokerage houses that caused trades in these markets to fail in Q3 2008, resulting in the death of Lehman and some other market makers. One very important rule that was made but not enforced was the one that says if you hold a T-bill with a certain expiration date, you're supposed to trade it in the Reverse Repurchase Market (Repo), which will allow other traders to fill out their portfolio with the appropriate "zero-risk" bonds, as required by the Black-Scholes model.

Yes, Geithner's role in the lockup of the bonds market in early September was more than guilt by association. As head of the NY Fed, he knew, better than anyone else, the vulnerability of the Repo market to failed trades, and more than anyone else was responsible for not putting enough pressure on some Primary Dealers who were withholding bonds that other traders needed to complete trades and stay liquid. He could have enforced the rules preventing "fails", but did not.

Goldman and a few others cleaned up big after Lehman, the principal Repo market-maker, fell. Everyone knew there was an increasing problem with fails. The NY Fed was supposed to police those issues.

[leveymg]

30. Here's more on Fails in the Repo market Geithner was supposed to police

#
US Trying to Combat Treasury Repo Fails, May Lead to Negative ...
Nov 24, 2008 ... “The more chronic fails disrupt the Treasury market, ... Since the bankruptcy of Lehman Brothers Holdings Inc. in mid-September traders, .... November 24, 2008 at 1:25 pm. Treasury MMF that use repos have risk. ...
www.nakedcapitalism.com/2008/.../us-trying-to-combat-treasury-repo-fails.html - Cached - Similar
#
Decline and Fall of Western Civilization: more on repo fails
Wednesday, November 26, 2008. more on repo fails ... Following the collapse of Lehman Brothers in September, fails to deliver among the 17 primary ... are now scared to lend into the repo market in case their bonds are not returned, ...
declineandfallofwesterncivilization.blogspot.com/2008/.../more-on-repo-fails.html - Cached - Similar
#
Market Skeptics: Fails In Treasury Repo Market Caused By Cash ...
May 3, 2009 ... In a September research paper, she estimated that based on failure rates in 2007 and 2008, the cost to investors from failed deliveries is about $7 ... Fails to deliver in treasury repo market were caused by shortages of ...
www.marketskeptics.com/.../fails-in-treasury-repo-market-caused-by.html - Cached - Similar
#
Repo. market on “special” « ducati998
Mar 25, 2008 ... Just another WordPress.com weblog. March 25, 2008 ... The option of Treasury market participants to fail on, or postpone, .... zero through the beginning of October, reaching a low of -146 basis points on September 26. ...
leduc998.wordpress.com/2008/03/25/repo-market-on-special/ - Cached
#
US treasury market reaches breaking point /Euromoney magazine
Advanced search. Tuesday, November 25, 2008 ... Following the collapse of Lehman Brothers in September, fails to deliver among the 17 primary dealers ... are now scared to lend into the repo market in case their bonds are not returned, ...
www.euromoney.com/.../The-US-treasury-market-reaches-breaking-point.html - Similar
#
Market Pipeline: Ultra-low US rates undermine repo market
Dec 17, 2008 ... Although repo fails have been cleaned up, the repo market faces renewed problems as .... Q3 2008: Mortgage Equity Extraction Strongly Negat. ...
marketpipeline.blogspot.com/2008/.../ultra-low-us-rates-undermine-repo.html - Cached - Similar
#
repo market | Newsroom Magazine USA Edition
May 11, 2010... October 2008 (26), September 2008 (26), August 2008 (21) ... When the former CEO at Wall Street's first to fail shadow banking ... “Indeed, the repo markets had functioned rationally and smoothly .... From approximately August 2007 to the beginning of 2008, however, the fixed income repo markets ...
newsroom-magazine.com/tag/repo-market/ - Cached

[Recursion]

45. OK, I get your point, and that's fair enough. NT

[TheKentuckian]

14. He ALWAYS works for Goldman Sachs, he just has never been employed by them

[progressoid]

16. +1

[KittyWampus]

17. Oh my, this will be ignored. It interferes with the screamers' narrative.

[Subdivisions]

35. Who are the screamers and what is their narrative? n/t

[PA Democrat]

19. But it is important to remember who put Geithner in charge of the NY Fed.

So who selected Geithner back in 2003? Well, the Fed board created a select committee to pick the CEO. This committee included none other than Hank Greenberg, then the chairman of AIG; John Whitehead, a former chairman of Goldman Sachs; Walter Shipley, a former chairman of Chase Manhattan Bank, now JPMorgan Chase; and Pete Peterson, a former chairman of Lehman Bros. It was not a group of typical depositors worried about the security of their savings accounts but rather one whose interest was in preserving a capital structure and way of doing business that cried out for—but did not receive—harsh examination from the N.Y. Fed.

The composition of the New York Fed's board, which supervises the organization and current Chairman Friedman, is equally troubling. The board consists of nine individuals, three chosen by the N.Y. Fed member banks as their own representatives, three chosen by the member banks to represent the public, and three chosen by the national Fed Board of Governors to represent the public. In theory this sounds great: Six board members are "public" representatives.

So whom have the banks chosen to be the public representatives on the board during the past decade, as the crisis developed and unfolded? Dick Fuld, the former chairman of Lehman; Jeff Immelt, the chairman of GE; Gene McGrath, the chairman of Con Edison; Ronay Menschel, the chairwoman of Phipps Houses and also, not insignificantly, the wife of Richard Menschel, a former senior partner at Goldman. Whom did the Board of Governors choose as its public representatives? Steve Friedman, the former chairman of Goldman; Pete Peterson; Jerry Speyer, CEO of real estate giant Tishman Speyer; and Jerry Levin, the former chairman of Time Warner. These were the people who were supposedly representing our interests!

Of course, there have been the occasional nonfinance representatives from academia and labor. But they have been so outnumbered that their presence has done little to alter the direction of the board.

http://www.slate.com/id/2217811/

[leveymg]

36. This is a very important point. Who chose Geithner, and who did Geithner appoint to police the

markets at a time that trading rules, such as the "failure to trade" rule in the Repo market, were being ignored by the biggest global banks and brokerages in the all-important secondary bonds markets. Please see my post above at #29.

[marmar]

21. He's putting in overtime whoring for them now.......

nt

[Octafish]

23. Geithner made certain the U.S. Taxpyer paid Goldman Sachs $13 Billion.

Going from 10-cents on the dollar to parity, Geithner's actions served Goldman Sach's interests. That was ten-times the amount AIG had negotiated with Goldman Sachs-- before Geithner got on the case.

A more exact accounting says $12.9 Billion went through the AIG bailout to Goldman Sachs. As chairman of the NY Fed, Timothy Geithner had a choice of whom to serve: The U.S. taxpayer or Goldman Sachs. From the available record, it's clear whose side he chose.

Maybe $13 billion is peanuts to the Pentagon or Wall Street. I do know that money would make a big difference were it to be invested in the economy, for instance, in developing new industries.

[amborin]

42. yes, and fed billions to banks as head of NY Fed, under the radar, thru maiden lane.....

[leveymg]

46. At least $52 billion was channelled by the NY Fed through Maiden Lane to big foreign banks,

Goldman, BoA, and Citi, which also happened to be the Primary Dealers in the bonds markets. (See post #29) So, to recap, after Geithner allowed "fails" of Primary Dealers in the secondary markets to destroy the major U.S. market makers (Lehman), he oversaw the bailout competing Primary Dealers by funneling $52 billion through Maiden Lane (AIG) to compensate their losing positions in toxic assets. See, http://en.wikipedia.org/wiki/Maiden_Lane_Transactions

Maiden Lane II LLC is a limited liability company created when American International Group Inc. (AIG) was taken over by the U.S. government in September 2008. Since AIG's subsidiaries hold a great many residential mortgage-backed securities that are very risky, Maiden Lane II LLC was formed to purchase these RMBS. On December 12, 2008, the Federal Reserve Bank of New York began extending credit to Maiden Lane II LLC. A June 30, 2010 update to the Federal Reserve balance sheet reported the fair market value of net portfolio holdings were valued at $16,172 million.<3>

A news story dated March 16, 2009,<8> stated Maiden Lane II used billions in bailout money to purchase toxic assets, and that AIG used billions to pay other banks, including foreign banks- France's Societe Generale at $11.9 billion, Germany's Deutsche Bank at $11.8 billion, and Britain's Barclays PLC at $8.5 billion. AIG, through this fund also funneled significant bailout money to U.S. banks that had already been bailed out themselves under the Troubled Asset Relief Program. As AIG counterparties, Goldman Sachs got $12.9 billion, Bank of America got $5.2 billion, and Citigroup got $2.3 billion all at 100% on the dollar.

The March 16, 2009 article was critical of AIG's plan to pay in excess of $170 million as bonuses to AIG employees.

Instead of regulating the Primary Dealers, Tim Geithner let them run the markets into ruin in Q3 2008, and then selectively bailed them out for their losses. Tim was a real hero - man of the hour on the Street in Q1 2009, if you were Goldman, BoA, Citi, or one of the other surviving Primary Dealers, most of which are large, foreign banks. Now, that's what I call a return on investment.

[The Northerner]

24. Although quite late, maybe it's time to finally fire Geithner?

[mmonk]

25. He was Under Secretary of the Treasury for International Affairs

under Rubin who was previously with Goldman and he is considered by all to be a Rubin Protege' as well as serving under Lawrence Summers who is right wing in world economic circles (think Korea when Summers wanted them to balance the budget and raise interest rates during a recession). It's not about hating Obama, its about this suck ass Clintonesque economic team.

[GeorgeGist]

26. I guess folks are confusing him with the current ...

President of the New York Federal Reserve.

http://www.federalreserve.gov/aboutthefed/bios/banks/pres02.htm

[Whisp]

39. o my. You just crushed so many people's Santa Clauses here.

That has got to be one of the most repeated lies here then.

surprised? not at all.

In fact if one looks around a bit for information on the many many repetitive screamings about how awful Obama is (along with his staff) how he wants to destroy education and starve your grandmother by taking her cat food away, etc. etc., just look around a little bit, doesn't take long - and you find out it's just a bunch of bullshit, and it's not good for you.

and these are the people that claim they are the ones who are hard done by, that 'the truth' they have is being dismissed and and it's soooooo unfair.

[RandomThoughts]

40. So if the media reports he did work there.

Then they report he doesn't.

Aren't the people that now believe he doesn't exactly the same as those that believed he did?


Why is it different?

You still don't know except because of some article or post.

[JNelson6563]

44. Thank you for injecting truth into the discussion.

:toast:

[Safetykitten]

47. You don't have to "work" for them to work for them.

[Steely_Dan]

48. I am a critic of the President...

...but I appreciate you bringing this to our attention. It is important that we debate from a position founded on facts. I appreciate it.

-P