Friday, January 18, 2013

Looking Back at Tim Geithner

Zero Hedge (LINK) points us tonight to a surprising bit of dialogue between FOMC member Jeffrey Lacker and then-Vice Chairman (and head of the NY Fed) Tim Geithner, from pages 14-15 of the following (LINK), which is to August 2007 minutes of the FOMC meeting in which I have previously dated the great, global financial crisis to have begun:

MR. LACKER. If I could just follow up on that, Mr. Chairman.
MR. LACKER. Vice Chairman Geithner, did you say that they are unaware of what we’re considering or what we might be doing with the discount rate?
MR. LACKER. Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.
CHAIRMAN BERNANKE. Okay. Thank you. Go ahead, Vice Chairman Geithner.
VICE CHAIRMAN GEITHNER. Well, I cannot speak for Ken Lewis, but I think they have sought to see whether they could understand a little more clearly the scope of their rights and our current policy with respect to the window. The only thing I’ve done is to try to help them understand—and I’m sure that’s been true across the System—what the scope of that is because these people generally don’t use the window and they don’t really understand in some sense what it’s about.
CHAIRMAN BERNANKE. Okay. President Rosengren. 

There was no on-the-record further discussion of this, at least on the contiguous page.  Hmmm...

I began this blog in December 2008 in large part from disappointment that President-elect Obama had nominated Mr. Geithner to head up Treasury.  (There was not even a Zero Hedge yet.)  My position was based on his role as bailout-er, but then another issue surfaced.  Treasury contains IRS, and it turned out that Mr. Geithner had been challenged on his taxes.  This is what I first wrote about him, after the news broke (LINK):

Trust and a State 
You could not make this one up. Forget Zoe Baird (a Clinton AG nominee who was dropped because she had employed an "undocumented" nanny).
Mr. Timothy Geithner has been revealed to be a tax cheat of the first order. The Times hates to point it out, but has to spit it out, probably in return for a scoop. After an IRS audit showed that he underpaid his taxes by up to $17K for his 2003/4 returns, it turns out that the same "mistake" causing those returns to be a wee bit short were also present in 2001 and 2002. (You really can't make this up.)
When were the 2001-2 errors found? Last year, when Mr. Obama's "vetters" found the problem and "brought it to Mr. Geithner's attention", after which he paid tax and interest of $25,970.
So Mr. Obama has sat on this knowledge for 2 months and could not find anyone else in the entire US of A to be head of the Treasury Department. Which is in charge of the IRS, one might recall. So the Cabinet member in charge of the IRS is a tax cheat and this is just fine with Mr. Obama.
Recently, my wife did her part to combat the recession by giving the girls down the street some work making her nails gleam and glisten. One of those gals was Russian. She exclaimed with some emotion that in Russia, they knew the higher-ups stole, but they did not expect the same out of America. Her eyes are now open. And so are ours.
What does this have to do with markets and the economy?

This was my next comment (LINK):

          Geithner II (follow-up to "Trust and a State")
It doth worsen. The WSJ-online provides add'l details to the Times' article on Mr. Geithner's aggressive use of the tax code tonight in, "Geithner's Tax History Muddles Confirmation".
Read it and weep. Sleepaway camp? Some juicy extracts:
"As to why Mr. Geithner didn't pay all his back taxes after the 2006 audit, an Obama aide said the nominee was advised by his accountant he had no further liability. Senate Finance aides said they were concerned either Mr. Geithner or his accountant used the IRS's statute of limitations to avoid further back-tax payments at the time of the audit."
"Other tax issues also surfaced during the vetting, including the fact Mr. Geithner used his child's time at overnight camps in 2001, 2004 and 2005 to calculate dependent-care tax deductions. Sleepaway camps don't qualify."
"Amended tax returns that Mr. Geithner filed recently include $4,334 in additional taxes, and $1,232 in interest for infractions, such as an early-withdrawal penalty from a retirement plan, an improper small-business deduction, a charitable-contribution deduction for ineligible items, and the expensing of utility costs that went for personal use."
As someone who has been tres critical of the bailout(s), the secrecy, and the general incompetence of Government that allowed the crises to fester and then explode (and continue to fester), I have felt that the choice of Mr. Geithner was a sign that the new Administration would show continuity with the old, and that this was a bad thing for resolution of the problems.
Mr. Obama, take down this nominee. Real change is needed. Here's your excuse to do it.

And my next one (LINK):

Geithner Must Go (Not Arrive)
The New York Times continues to push to make the appointment of Mr. Timothy Geithner appear inevitable. Its latest writeup is titled, "Geithner's Skill May Trump Tax Issue".
There is something wrong with this title. What is wrong is that everything important that Mr. Geithner has been involved with in the past year has failed. So where is the skill?
There is a howler in the Times article. What do you make of this part of it?
"On Oct. 17, at a New York hotel, Mr. Obama and Mr. Geithner met for an hour and talked about policy and personal matters, according to accounts of the session. . ."
"Obama advisers say the candidate “fell in love” with Mr. Geithner, in the words of one, while a Geithner associate said Mr. Geithner reported being “smitten” with Mr. Obama. “They both have that kind of quiet confidence in their demeanor,” the associate said."
DoctoRx here. "Fell in love" and "smitten"? Is this Brokeback Mountain come to the Potomac?
In any case, Mr. Geithner is a failure at his current job and a tax cheat. For him to become Treasury Secretary would be bad for the economy. It doesn't matter whether Mr. Obama loves him or how many Senators rally round him.

And the final one on Mr. Geithner (LINK):

Geithner Follow-Up 
The WSJ is reporting as of its Jan. 15 edition in "IMF Informed Geithner on Taxes":
"Timothy Geithner, whose nomination as Treasury secretary has been delayed by his past failure to pay taxes, was repeatedly advised in writing by the International Monetary Fund that he would be responsible for any Social Security and Medicare taxes he owed on income he earned at the IMF between 2001 and 2004."
His nomination may be toast.


Here's one more related post (LINK):
Here is the title:

SATURDAY, JANUARY 31, 2009I Second That Evasion: Tom Underpays Tim

And the most cogent part of a relatively long post:

Here is the Times' headline:
"Use of Free Car Lands Tom Daschle in Tax Trouble"
DoctoRx here: Doesn't sound too bad, does it? Perhaps just a forgotten couple of limo rides? 
President Obama's pick for health and human services secretary, Tom Daschle, failed to pay more than $128,000 in taxes, partly for free use of a car and driver that had been provided to him by a prominent businessman and Democratic fund-raiser, administration officials said Friday.
Note the word "partly", whichindicates that the headline of the article was too easy on Mr. Daschle, and also note that $128,000 far exceeds Treasury Secretary Tim Geithner's tax underpayments.
Mr. Daschle, concluding that he owed the taxes, filed amended returns and paid more than $140,000 in back taxes and interest on Jan. 2, the officials said. 

At least Mr. Daschle stayed in the private sector.