Kerry speaking at the Finance Committee today

[karynnj]

The Geitner hearings were yesterday and today:

Today, Kerry spoke of the reality of why banks weren't lending and spoke of wanting the stimulus to give money to states, so they and the towns will Keep firemen, teachers etc.
( at about 1:25 minutes)

Yesterday, he spoke of banks with less real assets than they genuinely have - due to including "polluted assets" (at about 1:29 minutes)

http://finance.senate.gov/sitepages/hearings.htm


At the end of Kerry's words yesterday, Baucus was rather rude - but if you listen to Baucus after Kerry today - he seems to have picked up on what Kerry was saying but he has nowhere the big picture Kerry does.

[sandnsea]

1. Is this the "banks are insolvent" comments?

I saw a short article about it yesterday and thought it was kind of earth shaking. There were similar remarks from Corker of TN, iirc. But apparently a camera to film an unnecessary oath is more important.

Is there a transcript anywhere? I was wondering how many of them agree that our banks are insolvent, and how many and which banks they're talking about.

[karynnj]

2. The Wednesday hearing is that one

It is earth shattering. Here is a link to Paul Krugman's column that Kerry referenced - http://www.nytimes.com/2009/01/19/opinion/19krugman.html?_r=1

The strange thing is that what Krugman observed (and Kerry spoke of) is NOT complex - the banks are still counting at face value assets - like mortgage based securities that have questionable value. The sad thing, if you watch more of the hearings is that very few of the Senators have the intellectual honesty and courage to even face what this fact that can be understood even if you failed Economics 101.

You see that Geitner didn't really answer the question at all - other than to say he shared the Senator's concern. Baucus actually gave Geitner an out to not respond - telling him he that he had minus 30 seconds of Kerry's time left to answer in. Remember all the times on SFRC where Lugar sometimes told Kerry to continue as time expired because he was pursuing an important line of questioning? This was one of the best questions asked - and it was clear that Baucus did not want the discussion to go that way. Then the next day after Kerry spoke, Baucus (completely unrelated to what Kerry just said) started speaking of bank being too leveraged as the cause - sounding almost like a dazed accident victim trying to understand what happened.

In the second day, you have know-it all A student Schumer referencing the zombie bank issue Kerry brought up saying that HE called "people" and he found that the toxic assets were really high - maybe $3 trillion - "too big" for them to clean the books. All said in the usual "I'm smarter than you" Schumer voice. This gets back to what Kerry was saying about reality. Is the problem that removing $3 trillion of devalued assets would be a shock or is the problem that there ARE $3 trillion of devalued assets.

The difference between Kerry and Schumer here may be one Democratic battleground on this issue. Kerry on Wednesday spoke of how giving huge sums of money to the banks has just propted up the shareholders of the banks. Schumer is fighting for his base - the shareholders, wall street and the banks. But shouldn't it be wall street and the shareholders that take most of the hit rather than spreading the pain over everyone. There was an inherent risk in stocks, even though the experience of the last 30 plus years is that there was FAR more reward than risk over time if you were diversified.

It may be that Baucus was simply trying to speed up the confirmation hearings by keeping them from going off into complex economic and financial discussions that need to be held later. The problem is that knowing the views of Geitner on this are relevant to the hearing. What is clear is that there will be discussions - in the administration, the Finance and other committees, in the financial and economic worlds - because this is uncharted territory and there are no simple answers.

I would love a REAL answer from Geitner to the many facets of Kerry's Wednesday question - what of the idea of giving a significant chunk of the stimulus to states to keep people doing important work employed, what about cleaning up the books of banks - as had to be done with the S&L crisis. It is interesting that Kerry, Wyden and others are sounding more FDR like than some of the Obama financial team. It is fascinating that Corker - while speaking during the HRC confirmation time on a different subject - started by complementing Kerry on his comments. It does suggest that when the stimulus is fought over there will be bipartisanship and some very weird coalitions.

(As to your question - I don't know where there are transcripts. There was little on the banks that were really insolvent - other than Baucus saying the small, local banks never engaged in this kind of leveraging. There was little detail - though the Krugman column is speaking of large NYC banks (I think). It was hard to see how many Senators agreed - as many spoke more about Geitner not paying his taxes.) I also agree 100% that this was more important and more interesting than whether there was a camera as Obama resaid the oath. You would think this situation would have made our media get a sense of what is important.

[sandnsea]

3. Are these figures correct

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x4893477

And if Citi is leveraged at $1-$46, is it the same as that $2,000 to $100,000 home example I gave? Or is it that you owe $100,000 on a $50,000 valued home so you're in even farther than the ratio appears.