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Earlier this week, George Stephanopoulos had an interview with Timothy Geithner:

GEITHNER: You know, I think it's very important banks work very hard to start to rebuild trust and confidence of the American people in their institutions in the financial system. They did a huge amount of damage to the country, lost a huge amount of trust and confidence. They need to work very hard to restore that. One of the ways to do that...

STEPHANOPOULOS: Do you think they get that?

GEITHNER: I don't think they get it. I think some banks do; I don't think all banks get it yet.

STEPHANOPOULOS: What do they need to do to show that they get it?

GEITHNER: I think they need to make sure they're doing everything they can to help people who can afford to stay in their homes stay in their homes, help make sure they are lending in communities that need access to credit, they're working very hard to make sure that viable businesses that face some increased demand for orders now for their products now can get the credit they need.

They need to show some restraint and care in how they pay their people, and they need to be supportive of the kind of reforms we need to create a more stable system in the future.

STEPHANOPOULOS: That's all encouragement. Where's the stick?

GEITHNER: The stick is through what Congress is going to have to legitimate through reforms. You know, we're not going to run a strategy to protect the country from future financial crises that rests on the hope that banks in the future behave more wisely and more nobly. We're going to run a strategy that requires reforms that are going to -- going to restrain risk-taking, provide better protections for consumers.

Really, Tim? Because I don't hear anything like reform happening in Congress. In fact, voters might somehow get the wrong idea (or the right idea) about your banking bailout after stories like this:

Dec. 21 (Bloomberg) -- In the first six months of 2010, about 6,000 employees of Goldman Sachs Group Inc. will take a break from their spreadsheets and move across the southern tip of Manhattan to a new 43-story, steel-and-glass skyscraper.

The building was a bargain -- and not just because the final cost is expected to be $200 million less than the $2.3 billion price the company had estimated when construction began in November 2005. Goldman Sachs also benefited from the government’s determination to avoid losing jobs in lower Manhattan after the Sept. 11, 2001, terrorist attacks.

Building a new headquarters cater-cornered to where the World Trade Center once stood qualified the firm to sell $1 billion of tax-free Liberty Bonds and get about $49 million of job-grant funds, tax exemptions and energy discounts. Henry Paulson, then Goldman Sachs’s chief executive officer, threatened to abandon the project after delays in addressing his concerns about safety. To keep the plan on track, state and city officials raised the bond ceiling to $1.65 billion and added $66 million in benefits. The interest expense on the financing is about $175 million less over 30 years than if the company had issued corporate debt at the time, according to data compiled by Bloomberg.

“It was absolutely imperative that Goldman Sachs keep its world headquarters downtown,” says John Cahill, who took part in the negotiations as chief of staff to then-Governor George Pataki and now works at New York law firm Chadbourne & Parke LLP. “They had the financial resources to move anywhere.”

I'm so glad someone who has been there has finally said it:

(I)n a move that has sent ripples all the way to the White House, (former Marine Corps Captain Matthew) Hoh, 36, became the first U.S. official known to resign in protest over the Afghan war, which he had come to believe simply fueled the insurgency.

"I have lost understanding of and confidence in the strategic purposes of the United States' presence in Afghanistan," he wrote Sept. 10 in a four-page letter to the department's head of personnel. "I have doubts and reservations about our current strategy and planned future strategy, but my resignation is based not upon how we are pursuing this war, but why and to what end."

The reaction to Hoh's letter was immediate. Senior U.S. officials, concerned that they would lose an outstanding officer and perhaps gain a prominent critic, appealed to him to stay.

U.S. Ambassador Karl W. Eikenberry brought him to Kabul and offered him a job on his senior embassy staff. Hoh declined. From there, he was flown home for a face-to-face meeting with Richard C. Holbrooke, the administration's special representative for Afghanistan and Pakistan.

"We took his letter very seriously, because he was a good officer," Holbrooke said in an interview. "We all thought that given how serious his letter was, how much commitment there was, and his prior track record, we should pay close attention to him."

While he did not share Hoh's view that the war "wasn't worth the fight," Holbrooke said, "I agreed with much of his analysis." He asked Hoh to join his team in Washington, saying that "if he really wanted to affect policy and help reduce the cost of the war on lives and treasure," why not be "inside the building, rather than outside, where you can get a lot of attention but you won't have the same political impact?"

Hoh is quick to say he's not some hippie peace-nik. Sigh. Why does he make that sound like a bad thing? But Hoh does feel that our presence does nothing but escalate violence and turmoil with the Afghans.

(M)any Afghans, he wrote in his resignation letter, are fighting the United States largely because its troops are there -- a growing military presence in villages and valleys where outsiders, including other Afghans, are not welcome and where the corrupt, U.S.-backed national government is rejected. While the Taliban is a malign presence, and Pakistan-based al-Qaeda needs to be confronted, he said, the United States is asking its troops to die in Afghanistan for what is essentially a far-off civil war.

As the White House deliberates over whether to deploy more troops, Hoh said he decided to speak out publicly because "I want people in Iowa, people in Arkansas, people in Arizona, to call their congressman and say, 'Listen, I don't think this is right.' "

"I realize what I'm getting into . . . what people are going to say about me," he said. "I never thought I would be doing this."

Continue reading »

Oops, just kidding! Just think, if they'd actually admitted the banks were in deep trouble, and that their assets weren't worth a dime, the crisis might have bottomed out a lot sooner - and the banks wouldn't have been able to use TARP funds to buy up their competitors!

Senior U.S. officials deliberately misled the American people about the health of banks receiving huge government cash infusions last year, according to a report released today from the Treasury Department TARP watchdog.

The officials believed they were telling noble lies. The idea was that confidence needed to be restored and panic stemmed, even if this meant misleading the public about the actual health of our financial institutions.

Of course, this backfired. The government and the bailout lost public credibility when the financial crisis deepened, according to TARP watchdog Neil Barofsky's report.

Worse, the lies may have made the crisis worse by creating false expectations that the bailed out banks would be able to increase lending. Businesses and individuals planning to borrow would have discovered that their projects were impossible and their savings inadequate as banking lending continued to fall.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that the $125 billion injection into nine banks in October 2008 was a program for "healthy" institutions. But privately senior officials believed several of those firms were less than healthy. Hank Paulson himself believed one of those institutions might fail.

"By stating that healthy' institutions would be able to increase overall lending, Treasury may have created unrealistic expectations about the institutions' condition and their ability to increase lending," the report said.

I'm not as optimistic as this reporter, but then, I don't live on Planet Beltway, either. George Bush's legacy lives on - we still have a commercial real estate crash to get through, and the banks have only postponed their day of reckoning. (Although the Onion has a slightly brighter forecast):

Despite an emerging economic expansion, businesses were sufficiently skittish about the future that the job market continued its long, steep decline in August, according to a new government report Friday. The unemployment rate rose to 9.7 percent, from 9.4 percent, as employers shed jobs for the 20th straight month, the Labor Department said.

The increase was greater than many analysts had forecast, and it undermined hopes that the corporate sector will rapidly rebuild its workforce following the economic trauma of the last year. That in turn could keep a self-sustaining recovery from taking hold, as Americans have less money to spend and less confidence about their own job prospects.

"Our clients tell us they will not hire in anticipation of a recovery, but will wait until they see it," said Jonas Prising, an executive vice president at Manpower, the giant employment services firm. "In a normal recession, people would now start to feel more comfortable and start hiring, but nobody is doing that today. They'll do it when they see real orders and real business."

The new numbers included some silver linings: The 216,000 jobs that employers shed in August was the slowest rate of job loss in a year, which drove the stock market up 1.3 percent, as measured by the Standard & Poor's 500-stock index.

Companies are not laying people off at the same furious pace they were a few months ago -- the number of people to lose their jobs in mass layoffs fell 26 percent in July. But neither are they willing to take the risk of bringing on new workers, despite signs that there could be better times ahead.

Tom Ridge wants to have it both ways. He sat on his hands then to save his job and now he wants to get paid again. Remember, he could have made a difference. Now he describes the terror alerts he propagated as "political" when he has a book to sell, but it's not sitting well with a lot of us, especially when he already knew that in 2004.

First, the timing of terror alerts raises questions that aren’t adequately answered.

If there’s no intent to benefit the president in a re-election year, Ridge should say more than “we don’t play politics” at the Department of Homeland Security.

Especially after doing a virtual campaign ad by announcing “new” threats just after the Democratic convention and praising “the president’s leadership in the war against terror.”

And it wasn’t said off the cuff or in answer to a question. It was said in prepared remarks.

It makes Ridge more salesman than guardian, more political servant than public servant.

Same with failing to divulge the full context of information on potential terror sites later revealed as three to four years old.

How does pushing the president while holding back the truth give anyone confidence “we don’t play politics”?

Maybe he’s told what to say, when and how, and maybe that’s why he wants out. A source close to Ridge tells me the relationship between Ridge and the White House “isn’t what it used to be.” Still, it’s his gig.

Sometimes I wonder if reporters have any damned sense at all. The reason the unemployment rolls have dropped is simple - people (like me!) have tapped out their benefits:

June 18 (Bloomberg) -- The number of Americans receiving claims for unemployment benefits dropped for the first time since January, adding to evidence the job market is starting to thaw.

The number of people collecting unemployment insurance plunged by 148,000 in the week to June 6, the most since November 2001, to 6.69 million, the Labor Department said today in Washington. Initial claims rose by 3,000 to 608,000 in the week ended June 13, in line with forecasts.

The average number of claims over the last four weeks fell to the lowest level in four months, an indication that the U.S. economy is stabilizing after the worst recession in half a century. Even so, companies are likely to be slow to hire new employees, sending unemployment rates higher, analysts said.

“The labor market remains weak but it’s starting to stabilize,” said Maxwell Clarke, chief U.S. economist at IDEAglobal in New York. “An improvement in employment conditions and improvement in confidence go hand in hand with an improvement in consumer spending.”

Corporate welfare at its finest.

White House:

This is a pivotal moment for America's economy. Problems that originated in the credit markets -- and first showed up in the area of subprime mortgages -- have spread throughout our financial system. This has led to an erosion of confidence that has frozen many financial transactions, including loans to consumers and to businesses seeking to expand and create jobs. As a result, we must act now to protect our nation's economic health from serious risk.

There will be ample opportunity to debate the origins of this problem. Now is the time to solve it. In our nation's history, there have been moments that require us to come together across party lines to address major challenges. This is such a moment.

America's economy is facing unprecedented challenges, and we are responding with unprecedented action.

Paul Krugman details what happened and says:

The unthinkable - a government buyout of much of the private sector's bad debt - has become the inevitable.

USA Today: Rep. Tom Cole of Oklahoma, who runs the committee tasked with helping elect Republicans to Congress, said Tuesday's defeat in Mississippi — after losing GOP seats in other special elections in Illinois and Louisiana — was evidence that "a large section of the American people doesn't have confidence in the Republican Party." ...He said, "When you lose three of these in a row, you have to get beyond campaign tactics and take a long hard look: Is there something wrong with your product?"

Open thread below....

We can dream, can't we?

TIME:

You could say the same thing lately for Fox News Channel itself. Fox hasn't gone soft, but from watching its coverage lately, I get a sense that the haven for conservative hosts, and viewers alienated by liberal news, needs to figure out its next act. Fox News is not simply a mouthpiece for the Bush White House: it rose with Bush after 2000 and 9/11, was played on TVs in his White House and reflected the same surety and flag-lapel-pin confidence in its tone and star-spangled look. It was not just a hit; it was the network of the moment.

Now, with two Democrats locked in what seems like a general-election campaign and lame-duck Bush fading from the headlines, it has to figure out how not to seem like yesterday's news. At times recently, the network has appeared uncertain about its focus. Its primary-night coverage has felt staid and listless. Sometimes it has gone tabloid with celebrity-news, true-crime and scandal stories (WEBSITES POSTING SEXY PICS LIFTED FROM FACEBOOK). At other times it has retreated into a kind of war-on-terrorism news-talgia, playing up threatening chatter and new missives from al-Qaeda leaders while its rivals are doing the election 24/7; flipping to Fox can feel like time-traveling to 2002.

We've had so many comments on our earlier thread---we needed to start another one.

So, how many times did John McCain say "My friends?"

Hillary wins Ohio and is ahead in TX at this moment, but Obama is still ahead in delegates. Hillary spoke with great confidence and Obama is smacking down McCain's vision of America. The Dems have almost double the amount of votes in OH and TX---another huge turnout...