There was an interesting email in my in-box this morning from a CNBC producer, alerting us to the following event. Tim Geithner has agreed to take questions from the unwashed masses, in a live Town Hall tomorrow night at 7pm est.
This is your our chance. We missed the opportunity with Digg, Geithner and the WSJ a few weeks ago, but you submitted some outstanding questions in comments that the Treas Head should see. The rules encourage both written and video queries.
I will be submitting the following 9 questions:
- Will you admit that with bank capital ratios at approximately 8% industry wide, and with most assets worth 40% less than purchase price, that essentially all banks are insolvent? And will you also admit that we've chosen to ignore the problem and whistle by the graveyard with FASB's change to fair-value accounting rules?
- In the discussion of bank losses, why are taxpayers asked and expected to bear the entire loss, while bank bondhholders who recklessly lent trillions to risky bank managements, are spared completely from the discussion? They knowingly took the investment risk in search of higher returns and they haven't been asked to forfeit a penny of their bond holdings.
- China is currently spending reserves buying natural resources all around the world that will be needed in the next century. Meanwhile we are wasting trillions propping up zombie banks, the mortgage market (Fannie & Freddie), AIG and the uncompetitive U.S. auto industry. Which seems like a smarter long-term strategy to you, Mr. Secretary?
- Who made the decision to pay AIG counterparties at par (100 cents on the dollar)? Was it your predecessor Henry Paulson at Treasury; was it Fed Chairman Ben Bernanke, or was it Lloyd Blankfein, CEO of Goldman Sachs? Keep in mind that former AIG CEO Ed Liddy has stated under oath in testimony before Congress that the Fed is the agency that told him to make these payments at par.
- Why was LLoyd Blankfein, CEO of AIG's largest counterparty, allowed to attend the meeting to decide the fate of AIG? Do you not see a conflict of interest?
- Why did you agree to AIG counterparty payments at par, as Head of the New York Fed? As example, Lehman counterparties received only 11 cents on average. And why did you not demand preferred shares from the banks in exchange for these payments? Taxpayers received nothing in exchange. Please explain this mistake as it greatly contributes to the perception that the Federal Reserve and the U.S. Treasury are captured by Wall Street interests.
- As head of regulation for Wall Street at the New York Fed, what were your thoughts personally when then CEO of Goldman Sachs, Henry Paulson, successfully lobbied the SEC to grant a leverage exemption to the 5 largest investment banks in 2004? Why did you not testify at this hearings, considering your role as regulator?
- Do you believe that the people who oversaw the build-up of this crisis, yet somehow missed it completely, should be the same regulators who establish the new rules. Or do you agree with Dr. Nassim Taleb and others who think we need a new set of sheriffs?
- When you worked for the IMF, you were famous around the world for your strict demand that failed, politically-connected banks should not and would not be supported in any IMF bailout. Why have you adopted the completely opposite approach to the U.S. banking crisis?
Make sure to submit your questions here