Wells Fargo’s CEO Richard Kovacevich has some harsh words about Geithner’s stress test. “It’s Asinine” Says Wells’ CEO. Henry Blodget seems to agree.
“As Americans recover from the shock and disgust of this latest [AIG] revelation, they will justifiably ask who got us into this mess,” writes Henry Blodget. “The answer, in part, is the same man who has yet to come up with a coherent plan to get us out of it: Tim Geithner.”
Geithner told Bloomberg TV this weekend he will “move quickly to lay out a new financing program” to help banks deal with their toxic assets.
In other words, Geithner still hasn’t put the finishing touches on the “Financial Stability Plan” he announced in mid-February to rousing condemnation because it lacked detail. More to the point, Geithner still doesn’t have a coherent plan he’s willing to share a year after the Bear Stearns-JPMorgan shotgun wedding.
My Comment: Ah Yes, “The Plan”. What exactly is the plan? No one really knows because it changes every day by the seat of the pants. Nonetheless, Bernanke told 60 Minutes’ Correspondent Scott Pelley “We have a plan” in an exclusive Cream Puff Interview on Sunday.
Unfortunately, Pelly failed to ask what the plan is in an interview that was more like an infomercial for the Fed than anything else.
Similarly, Geithner & Co. have yet to unveil their new blueprint for regulating banks. But, again, it’s coming soon: “We want to accelerate the pace of change on the reform agenda,” Geithner said at this weekend’s meeting of G20 Finance Ministers.
The plan is to unveil the new regulatory framework at the full G20 summit on April 2, The Wall Street Journal reports.
My Comment: Before announcing plans, it might behoove Geithner and Bernanke to actually have one. What they seem to have, if anything, is a plan to have a plan.
While Geithner fiddles, bank executives are burning mad over what they see as onerous regulations and micromanaging from Washington D.C. They’re especially angry now that the government’s aid has allowed them to generate profits in early 2008 (excluding write-downs on toxic assets.)
“Is this America — when you do what your government asks you to do and then retroactively you also have additional conditions?,” rails Wells Fargo CEO Richard Kovacevich, according to Bloomberg.
Kovacevich also called the ongoing stress tests “asinine” and complained (again) about being forced to take TARP money back in September — and all the accompanying restrictions on executive pay and employee junkets
I am sympathetic to some of Kovacevich’s gripes (See Bazooka Boomerangs: Banks Return Bailout Funds) and in total agreement that Geithner’s overall strategy is “Asinine”. However, if Kovacevich did not like the terms of Paulson’s offer he should have had the guts to refuse it.
Furthermore, Wells Fargo may have brought much of this on themselves. Well’s decision to buy Wachovia is questionable given Wachovia’s decision to buy Golden West for $25 billion. Certainly the latter was truly asinine.
Extra Mile Of Madness
Every time Geithner opens his mouth I wish someone would shove their socks in it. Please consider Geithner Urges Banks to Go ‘Extra Mile’ to Boost Business Loans.
Treasury Secretary Timothy Geithner urged banks to “go the extra mile” and keep credit flowing to U.S. businesses, saying that refusing to make loans will worsen the faltering economy.
“When banks individually pull back out of a sense of prudence and caution, the collective impact of those actions will make the economy weaker and make each individual bank worse off,” Geithner said in prepared remarks at the White House in Washington.
Encouraging more production and more spending in the wake of falling consumer demand and rising unemployment is simply asinine. Indeed, asininity is running rampant. If you are Searching For Common Sense, you have to go all the way to New Zealand to find any.
Mike “Mish” Shedlock
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