Will Bank CEOs Be Next?
Bloomberg highlights Geithner leaving open possibility of bank CEO resignations: “Treasury Secretary Timothy Geithner said he’s prepared to oust the senior management and boards of directors at banks that require “exceptional” assistance from the U.S. government. ‘If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes,’ while ensuring taxpayers are protected, Geithner said today in an interview on the CBS ‘Face the Nation’ program. ‘Where that requires a change in management and the board, then we will do that.’”
Congressional TARP watchdog will call for bank CEO ousters this week. The Guardian: “Elizabeth Warren, chief watchdog of America’s $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration’s approach to saving the financial system from collapse … [She] is also set to call for shareholders in those institutions to be ‘wiped out’.” (via Ian Welsh)
WSJ checks in on the stress tests for banks: “Top federal bank regulators plan to meet early this week to discuss how to analyze the results of stress tests being conducted on the country’s 19 largest banks, people familiar with the matter said … The Federal Reserve is overseeing the stress-test-analysis process. People familiar with the matter said the final analysis isn’t likely to be completed until at least the end of the month.”
Dean Baker asks “Are Treasury’s Bank Stress Tests a Joke?”: “A stress test is supposed to examine a worse case scenario, not an optimistic one. By picking overly optimistic projections, Treasury increases the likelihood that banks will pass the stress test.”
BOB SCHIEFFER: But I guess the specific question I was asking, do you think you’re going to have to ask for more in the way of a stimulus?
TIM GEITHNER: Can’t make that judgment at this time. Again, our first priority now is just to move on the
programs Congress has passed and to put those in place as quickly as possible.
Republicans lost the last two elections, but they may have won the messaging war. Resistance to public investment has become second nature to the Washington establishment these days, and that could be a problem for Obama’s agenda in the long run. Nearly 30 years after Ronald Reagan took a chainsaw to federal spending, Democrats and members of the media have internalized conservative nostrums about the dangers of deficits. Their phobia of big public spending projects is so ingrained that they can barely comprehend the argument that Obama and many economists are making: Government spending can be useful, and not all debt is something to be scared of. If Obama is speaking a different language than the leaders of his own party and the reporters who cover them, he may have trouble keeping Congress on board with all his proposals.
OurFuture.org’s Bernie Horn sizes up the challenges ahead for the entire Obama agenda: “The House is able to limit debate and House leadership has successfully enforced some party discipline. Helping them along is the fact that House Republicans are too ideological for their own good—the GOP has offered no reasonable economic proposals to attract Democratic conservatives. Senate Democrats, in contrast, are a mess. If President Obama and his progressive allies are to ‘change’ Washington, that’s where the heavy lifting will be done.”
Because “Save Our Tax Havens!” Didn’t Test Well
WSJ reports corporations are organizing to protect their offshore tax havens. “…corporate lobbyists are intensifying efforts to block an Obama administration proposal to raise taxes on overseas profits. Executives say the measure, which could cost U.S.-based multinationals $100 billion over the next decade… groups including the Business Roundtable, the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Foreign Trade Council have helped form a lobbying coalition called Protect America’s Competitive Edge that is devoted specifically to the issue … At issue is a longstanding feature of American tax policy that allows multinationals to avoid U.S. taxes on much of their overseas earnings, as long as the money remains invested offshore. Many companies use the rule to park overseas earnings in tax-haven countries for years.”
Health Care This Year
W. Post’s E.J. Dionne oozes optimism on health care reform.
NYT reports on a major NYC hospital moving to consumer-controlled electronic medical records:“Seeking similar gains across the health care system, the Obama administration plans to spend $19 billion over the next few years to accelerate the adoption of electronic health records in doctors’ offices and hospitals. The government’s plan has no incentives for consumer-controlled health records. But [New York-Presbyterian's] Dr. Corwin says the personal health record is a ‘powerful additional tool for improving health care’ and one that offers added benefits because ‘the data is controlled by the patient, not tethered to an institution.’”