Friday, February 26, 2010
Fed chair Ben Bernanke is nicknamed "Helicopter Ben" because of his 2002 speech recommending that money be dropped from a helicopter in order to prevent deflation (and then actually doing it).
Similarly, I think we should nickname Secretary of Treasury Tim Geithner "Pallet Tim".
As I wrote last July:
In addition, as I have argued for years, the amount of the TARP bailouts could be much higher than $700 billion. See this and this. The amount could be in the trillions.
A soon-to-be released report by special inspector general Neil Barofsky finds:Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks
[The banks have also distributed] bailout money to pay executives fat bonuses which they used to buy gold toilets and prostitutes, and to lobby Congress to stop any meaningful reform.
The report by the special inspector general also calls on the Treasury Department to require regular, more detailed information from banks about their use of federal aid provided under the Troubled Asset Relief Program.
According to the Post, the Treasury has refused to collect such information, and:In a written response, the Treasury again rejected that call. Officials have taken the view that the exact use of the federal aid cannot be tracked because money given to a bank is like water poured into an ocean.But just like dye is frequently added to streams by scientists in order to trace the flow of water, Treasury could easily track the flow of bailout funds. Indeed, the government has very sophisticated software which tracks funds, which it uses in terrorism investigations. But that is all moot. The truth of the matter is that Treasury never even asked the banks to keep track of where the bailout money was going. If they ask, the banks would be required to keep track themselves.
And Geithner's Treasury is administering trillions more through its other "emergency" programs.
Of course, Geithner's New York Fed also pushed to keep pay AIG's CDS counterparties at full value, and then to keep the deal secret.
But Pallet Tim had experience distributing large sums of money without any oversight even before he became Treasury Secretary.
In July 2009, Congressman Henry Waxman stated:
In a 13 month period from May 2003 to June 2004, the Federal Reserve sent nearly $12 billion in cash, mainly in $100 bills from the United States to Iraq. To do that, the Federal Reserve Bank in New York had to pack 281 million individual bills ... onto wooden pallets to be shipped to Iraq. The cash weighed more than 363 tons and was loaded onto C-130 cargo planes to be flown into Baghdad...
The Los Angeles Times reported at the time:
Prior audits by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, found that more than $8.8 billion in such funds could not be properly accounted for.Bloomberg wrote:
A report from Waxman's House Oversight and Government Reform Committee ... described contractors being told to bring big bags to collect shrink- wrapped bundles of money and one episode where a Bremer staff member was allegedly told to spend $6.75 million in a week.I'm not too worried about the money having fallen into enemy hands. I think it is much more likely that it fell into the hands of gleeful defense contractors, like these happy fellows:
"We have no way of knowing if the cash that was shipped into the green zone ended up in enemy hands,'' Waxman, a California Democrat, said at today's hearing.
In addition, ABC noted that there might have been a partisan bias:
(I'm not trying to make this a partisan issue: under the current Democratic administration, I would guess that Democratic folks are favorably getting their palms greased).
Rep. Paul Hodes, D-N.H., claimed that recent college graduates with Republican ties were sent to Iraq instead of experienced government personnel.
Rodes challenged, "I want to know why half the U.S. staff had never been outside of the country before and had to get a passport for the first time?"
$2.4 billion of these $100 dollar bills were loaded onto pallets, put on C-130s and shipped to Iraq in June 2004:
And guess who was the head of the New York Fed at the time this was going on?
Then, when the shipment date changed, officials had to scramble to line up U.S. Air Force C-130 cargo planes to hold the money. They did, and the $2,401,600,000 was delivered to Baghdad on June 22, 2004.It was the largest one-time cash transfer in the history of the New York Fed
Yup ... Pallet Tim.
Note: I am not implying that the Fed's shipment to Iraq were illegal (they were apparently part of a UN-sponsored Iraqi oil revenue arrangement). And I am not implying that Geithner is responsible for the theft of billions of dollars by defense contractors or others - he was never asked to oversee distribution of the funds once they arrived in Iraq, and he wasn't head of the New York Fed when the shipments started.
I am simply saying that Geithner has long been a yes-man to the powers-that-be, who ships pallets of money wherever he is told without question or any follow-up or tracking whatsoever.