Wednesday, January 28, 2009
Out One Era...
When Barack Obama announced his economic team in November, they were all seen as an All-Star, centrist group, each of whom would sail through congressional confirmation without the slightest problem.
Monday, Obama's Treasury secretary pick, Tim Geithner, was confirmed, but 34 senators voted against him -- including four Democrats (counting Democratic-caucusing Independent Bernie Sanders). That level of opposition has to be considered a major slap to Geithner and the president who appointed him.
What happened? Well, welcome to the "new era of responsibility."
That phrase must have sounded nice when Obama and his speechwriters came up with it for the Inaugural address, but, as Geithner discovered, it has a real-world application.
Geithner's credentials surely didn't change between when Obama announced him in the fall and Monday -- but the perception of his character certainly did, specifically, the revelation that he had failed to pay $43,000 in payroll taxes while working for the International Monetary Fund from 2001-04. He finally paid up -- after being tapped for Treasury.
The fact that the guy in charge of the nation's revenue collection -- a current Federal Reserve bank president, no less -- wasn't up to date on his own tax liabilities was too much for most Senate Republicans. Even those that have made careers crossing their party -- like defeated GOP presidential candidate John McCain and Maine's Susan Collins -- voted against Geithner. In fact, were this not a case of 1) Granting a new, very popular president the people he wants and, 2) the nation in an economic crisis, bet that more Republicans and a few more Democrats would have abandoned Geithner as well.
Meanwhile, former Merrill Lynch CEO and (briefly) Bank of America exec John Thain also ran into the "new era." New York Attorney General Andrew Cuomo smacked both Thain and BofA's chief administrative officer with subpoenas. Cuomo wants to know why Thain accelerated payments of $4 billion in bonuses to Merrill executives -- even as the company was posting $15 billion in fourth-quarter losses. Traditionally, the bonuses had been paid out in January. This time, Thain distributed them in December -- right before the Bank of America went through. BofA, of course, has received $45 billion from the TARP fund (including $20 billion approved earlier this month to offset the larger-than-expected losses from Merrill Lynch.
Finally, Citigroup -- which has been in no end of trouble over the last couple of months -- was forced to scrap the purchase of a $50 million French private jet, after The New York Post revealed the sale in Monday's editions.
Call it "enforced responsibility," "proportionality," or "rough justice." Call it whatever you wish. It amounts to the same thing: When the rest of the country is reeling from layoffs spreading into every sector of the economy, tolerance of the antics of one-time Masters of the Universe and the companies they run is gone.
Brilliant, but manage to "forget" to pay your taxes? Expect to pay a price. Living beyond your means and helping your colleagues get fatter bonuses -- while the company's going downhill? Expect to be investigated. Take billions from the feds and still try to purchase a new private jet -- when the automakers were raked over the coals just for merely flying private planes to Washington, DC? Their antics will be slapped down by whatever measures are at hand -- a closer-than-expected Senate vote, called to account via subpoena, public shaming. Any means necessary.
The time for corporate BS is over. When close to a trillion dollars is being transferred from the U.S. Treasury to private firms, there's not one CEO whom Americans will have pity on.
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Monday, Obama's Treasury secretary pick, Tim Geithner, was confirmed, but 34 senators voted against him -- including four Democrats (counting Democratic-caucusing Independent Bernie Sanders). That level of opposition has to be considered a major slap to Geithner and the president who appointed him.
What happened? Well, welcome to the "new era of responsibility."
That phrase must have sounded nice when Obama and his speechwriters came up with it for the Inaugural address, but, as Geithner discovered, it has a real-world application.
Geithner's credentials surely didn't change between when Obama announced him in the fall and Monday -- but the perception of his character certainly did, specifically, the revelation that he had failed to pay $43,000 in payroll taxes while working for the International Monetary Fund from 2001-04. He finally paid up -- after being tapped for Treasury.
The fact that the guy in charge of the nation's revenue collection -- a current Federal Reserve bank president, no less -- wasn't up to date on his own tax liabilities was too much for most Senate Republicans. Even those that have made careers crossing their party -- like defeated GOP presidential candidate John McCain and Maine's Susan Collins -- voted against Geithner. In fact, were this not a case of 1) Granting a new, very popular president the people he wants and, 2) the nation in an economic crisis, bet that more Republicans and a few more Democrats would have abandoned Geithner as well.
Meanwhile, former Merrill Lynch CEO and (briefly) Bank of America exec John Thain also ran into the "new era." New York Attorney General Andrew Cuomo smacked both Thain and BofA's chief administrative officer with subpoenas. Cuomo wants to know why Thain accelerated payments of $4 billion in bonuses to Merrill executives -- even as the company was posting $15 billion in fourth-quarter losses. Traditionally, the bonuses had been paid out in January. This time, Thain distributed them in December -- right before the Bank of America went through. BofA, of course, has received $45 billion from the TARP fund (including $20 billion approved earlier this month to offset the larger-than-expected losses from Merrill Lynch.
Finally, Citigroup -- which has been in no end of trouble over the last couple of months -- was forced to scrap the purchase of a $50 million French private jet, after The New York Post revealed the sale in Monday's editions.
Call it "enforced responsibility," "proportionality," or "rough justice." Call it whatever you wish. It amounts to the same thing: When the rest of the country is reeling from layoffs spreading into every sector of the economy, tolerance of the antics of one-time Masters of the Universe and the companies they run is gone.
Brilliant, but manage to "forget" to pay your taxes? Expect to pay a price. Living beyond your means and helping your colleagues get fatter bonuses -- while the company's going downhill? Expect to be investigated. Take billions from the feds and still try to purchase a new private jet -- when the automakers were raked over the coals just for merely flying private planes to Washington, DC? Their antics will be slapped down by whatever measures are at hand -- a closer-than-expected Senate vote, called to account via subpoena, public shaming. Any means necessary.
The time for corporate BS is over. When close to a trillion dollars is being transferred from the U.S. Treasury to private firms, there's not one CEO whom Americans will have pity on.
Labels: Bank of America, John Thain, Merrill Lynch, Tim Geithner
