Tuesday, April 07, 2009
Another reason to defenestrate Tiny Tim Geithner
It has now become obvious that Tiny Tim is a lousy negotiator. McClatchy examines why, when he had the whip hand, Tiny Tim did not get the counterparties to take a haircut on their piece of the shitpile. Getting them to take 85 or 90 cents on the dollar would have saved taxpayers $Billions, but it would have hurt the poor little bankies. Or to put it another way:
Columbia's Coffee countered that "you could have asked everybody to scale down their expectations at least 10 or 15 percent, and that wouldn't have been discriminatory. And if you asked Congress, I think they would have been much more in favor of being discriminatory towards foreign banks, because this is funded with U.S.-taxpayer-funded dollars."Just because we pay for it, doesn't mean we deserve any consideration when important people are involved.
In bankruptcy, he said, the swaps might've been settled at 20 cents on the dollar. In other words, the government had leverage and chose not to use it.
"So I think that there has been an absence of hard bargaining here, and it is because the Fed puts its highest priority on its loyalty to the banking system and tends to subordinate economizing with taxpayer dollars."
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