Not The Staffing, But The Mindset

Tim Geithner is headed up to Capitol Hill tonight, maybe to offer House Democrats the same deal that Will Forte did on SNL - $420 billion dollars to whoever comes up with a plan to fix the banking system.



Geithner is taking his lumps, and in many ways deservedly so, but I think focusing on personnel, or the lack thereof, at Treasury is probably the wrong criticism. Over the weekend President Obama nominated three individuals for high-level Treasury posts, and it is clear that they were all working there, in what amounts to their current jobs, already. They were working as "counselors" instead of assistant Secretaries. They have offices and staffs. So I wouldn't get hung up on the personnel issue. What is far more concerning is the fact that Treasury has immense challenges right now, challenges they haven't been able ti handle. Geithner seems in thrall to the banksters and unwilling to cut them off or at least get some taxpayer upside in the bargain. There are also political constraints.

Administration officials say they are postponing their plan to produce a detailed road map for overhauling the nation’s financial regulatory system by April, in time for the Group of 20 meeting in London. Though officials say they will still develop basic principles in time for the meeting, the plan will not include much detail.

Treasury officials are also still scrambling to decide details of their plan to buy up as much as $1 trillion in toxic assets from the nation’s banks, one month after being widely criticized for presenting a plan that lacked any specifics on how it would work [...]

Many financial experts estimate that the nation’s banks are holding as much as $2 trillion in troubled assets, most of it tied to mortgages. By contrast, the Treasury has less than $300 billion left in the financial rescue plan that Congress reluctantly approved last year.

To avoid asking Congress for more money, Mr. Geithner has been trying to stretch government money by working with private investors, the Federal Reserve and government-controlled companies like Fannie Mae and Freddie Mac, the mortgage giants. But that has introduced other tough policy issues, many of which remain unresolved.

“Their huge problem is that the American public is not willing to accept large losses for large financial institutions,” said Vincent Reinhart, a former Fed official and senior fellow at the American Enterprise Institute, a conservative research and lobbying organization. “Everything they are doing is about having the smallest possible footprint on the federal budget. They don’t want to engage the Congress and they don’t want to engage the American people in that discussion.”

I'm not certain that the people aren't willing to accept losses; they aren't willing to accept giveaways. And that's the path Geithner apparently wants to take. It's that, more than the strain on a depleted staff, that we can rightly criticize.