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Obama’s shift on banks: Geithner on way out?

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January 22, 2010

President Barack Obama’s sudden decision to finally get tough on banks and their constant abuse of consumers and the public trusts signals an end to the financial industry friendly tactics of Treasury Secretary Tim Geithner and a return to the more regulation options pushed by Paul Volcker.

It could also mean Geithner is headed for the exits.

For some, Geithner can not leave the Obama administration soon enough. Critics have long regarded him as too cozy with the financial industry he was supposed to regulate. Others saw him as one of the architects of the financial crisis that helped spur the greatest recession since the great depression.

The banking industry, which got everything it wanted from Geithner, disagrees.

Reports The Washington Post:

For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner.

Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama’s right as the president endorsed his proposal and branded it the “Volcker Rule.” Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.

The moment was the product of Volcker’s persistence and a desire by the White House to impose sharper checks on the financial industry than Geithner had been advocating, according to some government sources and political analysts. It was Obama’s most visible break yet from the reform philosophy that Geithner and his allies had been promoting earlier.

Advocates of Volcker’s ideas were delighted. “This is a complete change of policy that was announced today. It’s a fundamental shift,” said Simon Johnson, a professor at MIT’s Sloan School of Management. “This is coming from the political side. There are classic signs of major policy changes under pressure . . . but in a new and much more sensible direction.”

Industry officials, however, said they were startled and disheartened that Geithner was overruled, in part because they supported the more moderate approach Geithner proposed last year.

5 Responses to Obama’s shift on banks: Geithner on way out?

  1. griff

    January 22, 2010 at 10:02 am

    What’s the difference? He’s just one of many, a scapegoat that will go on to bigger and better things while the rest carry on business as usual; a fall guy to appease the masses. I’m sure he’ll be rewarded handsomely for falling on his sword. A lucrative position at Goldman Sachs, perhaps.

    Pure theartre.

    We want indictments. Lots of ‘em.

  2. Kent.Shaw

    January 22, 2010 at 12:00 pm

    Second that, Griff. End the theatre. Indict.

  3. AustinRanter

    January 22, 2010 at 3:00 pm

    Actually, Geithner is probably the most powerful man in the government…including Obama.  Geithner might be the most powerful man in the world, considering his relationship and power over the very foundation of our financial and economic health and well being.  But more than that, his power can affect most every other nation in the world.

    He’s walked miles around the legislative means that could stop the banking, insurance, and market institution from raping America and other nations.  There are 3 pieces of legislation that could be repealed or altered to prevent these institutions from having the power to legally gamble away savings, retirement, and investment funds…without consequence.  There are no legal consequnces.  The laws are on their side.  If necessary, the taxpayers will back their loses and ante up more bucks that will enable the gambling addictions.

     

  4. Carl Nemo

    January 22, 2010 at 8:35 pm

    I’ve mentioned that I analyze photo’s associated with an article.  Geithner’s everso crooked, ratlike, scheming sneer would be good meat for the Pulitzer price winning caricaturist “Ramirez” with him creating a “Willy the Rat” equivalent of this mattoid.

     I urge folks that are not familiar with this cartoonist’s brilliance to look up his politically based cartoons and marvel at the genius behind his pen.  He’s the syndicated, featured cartoonist for IBD (Investors Business Daily) to which I subscribe. 

    I’ve noticed that SOT Geithner looks a bit uneasy off to the side while the President talks of reining in the banks through stricter Federal governance.  Hopefully Obama will have the “starch” to give this guy the ol’ seaboot launch over the stern of the USS America; immediately if not sooner into shark infested waters. : )

    Carl Nemo **==

  5. bogofree

    January 24, 2010 at 2:56 pm

    Ratso Rizzo? I can’t complain sinec I made a nice profit investing in post bail out financials. Just follow the money even applies to the little guy.