Geithner says government was 'surprised' by derivatives
Earlier today, Treasury Secretary Timothy Geithner told an assembled group of lawmakers that the Obama administration's plan to stimulate the U.S. economy is on the "expected path." The White House plan calls for an economic stimulus that will allocate billions of dollars to construction and other local projects. Geithner's statement was made before a joint hearing of the House Financial Services and Agriculture committees on Capitol Hill. The Treasury Secretary was asked where the plan went wrong, which led Geithner to opine that unemployment is inescapable during a recession. He added that the stimulus plan "was necessary and critically important to reduce the risk that we'd see hundreds of thousands of losses of jobs, and we'd see millions of job losses beyond this point, and see thousands of more businesses fail unnecessarily." Geithner also pointed out that the rate of decline in the economy has slowed, that consumer confidence is improving, that the financial system is healing, and that concern about a financial meltdown has receded.
These comments came while Geithner was discussing derivatives, financial institutions whose values are based on something else. Geithner noted that some financial institutions were encouraged to take on too much risk, thanks to the relative ease with which derivatives were bought and sold.
Geithner is asking the committee for more government control over derivatives, which he (and many others) feels contributed to the financial crisis by surprising government officials. The treasury secretary felt that the complex nature of derivatives "overwhelmed the checks and balances of risk management and supervision" -- in essence, surprising the government.
I want to go back to Geithner's assertion that the U.S. economy is on the expected path -- especially his belief that the concern over a financial meltdown has receded. It sure doesn't seem that way to me. I see the Dow going lower every day, and I wonder if investors' feelings are the same as those Geithner interprets.
In addition, I see that the administration has made a shift from its stance that the economy will get worse before it gets better. Does this mean the administration sees more pain ahead and is afraid to admit it? Perhaps, but I don't want to try and read any politician's mind.
As for derivatives, the proposed moves may not be enough. Furthermore, there are the concerns that the proposal would "raise costs and squash innovation." These kinds of ramifications are not what we need when the U.S. is trying to dig itself out of an economic hole.
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Reader Comments (Page 1 of 1)
7-12-2009 @ 10:42AM
cbasilovecchio said...
Subject: THE TOTAL SOLUTION:NO MORE FORECLOSURES,NO MORE DECLINING PRICES
There are presently 8 to 12 million home owners in trouble,
defaulting,defaulted or soon to be defaulting.
The worlds "braintrusts" have stated that recovery must
come to the housing market and housing prices must be
stabalized.The Fed Chairman stated,when asked how
much money would be lost?,answered,we will only know that
after the housing market is stabilized.
SO FIX THE HOUSING MARKET !
ALL 8 to 12 million homes can be stabilized,and the mortgages
can become a 100% asset based AAA note.Not only at NO cost
to the taxpayer but also without the use of any new money....
No stimulus...No asking Congress for trillion dollar bailouts,
just by using what is already in place,yes, legislation
already in place that simply needs to be modified.
THEY HAVE ALREADY SOLVED THE PROBLEM !
The"Housing and Economic Recovery Act of 2008"
It is a total solution that does not require funding.
JUST DO IT.
MAKE ALL CITIZENS ELIGIBLE (NOT JUST 62+)
and MAKE 100% of the ASSET AS THE
GUARANTEED LOAN!(NOT % of age)
"The Everybody Wins Plan"
Reset all loans with a new VERY AFFORDABLE
payment,a special 10-30 year loan.Just like in the 1930's;
lower payments,longer term.
Example : A $100,000 home would have a fixed payment
of $500 per month for the first part (the 10 of the 10-30 yrs)
THIS WOULD BE P.I.T.I.....
Principal
Interest
Taxes and
Insurance.
It is unbelievable low.All homeowners would love to have a
payment like that.Affordable payments that allow for a
$200 billion profit if this is in fact a $4 trillion problem..
email a request for free details. It's 3 pages and that too
long for this avenue.
Who would like to challenge a plan that:
...makes all homeowners current
....all gladly paying the mortgage
...get the lender 100% of Fair Market Value.
...NO more foreclosures
....No cost to the taxpayers
...NO MONEY NEEDED
I promise all of this,PLEASE BOB SHILLER,BEN,
OBAMA,please prove me to be that "ONE FOOL"
Check "The Everybody Wins Plan"
request by email
cbasilovecchio at aol dot com
or
bestsolutionsfl at aol dot com
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