March 19, 2009
For Immediate Release
Consumer Advocates Call on President to Fire Treasury Secretary Geithner
In a letter issued today, two consumer advocacy groups called on President Obama to obtain Treasury Secretary Timothy Geithner’s resignation.
The letter, from Harvey Rosenfield, the California-based consumer advocate who authored the state’s insurance rate rollback Proposition 103, and Jim Donahue of the Washington-based WallStreetWatch.Org, asserts that Geithner has been unable to transcend his earlier role, while Chair of the New York Fed, as an architect of the failed Bush Administration Wall Street bailouts — including the initial $80 billion AIG bailout.
Moreover, it appears the Treasury Department was aware of the latest round of bonus and retention payments but failed to announce them until after AIG issued $160 million in checks. Pointing out that the President has often called for “an open, honest government that would fight” for people, not special interests, it concludes that “In these grave days of national reckoning, the citizenry deserves better.”
“It is clear that Treasury Secretary Timothy Geithner cannot provide the requisite independence that is required in an environment in which financial institutions and other businesses are demanding trillions of dollars of taxpayer money,” the letter to President Obama states. “With respect, we urge you to ask for his resignation.”
Two weeks ago, WallStreetWatch.Org issued a 231-page report pinpointing twelve policy decisions by the federal government that led directly to the current financial calamity – and how those policies were dictated by Wall Street through over $5 billion in campaign and lobbying expenditures between 1998 and 2008 by many of the same firms who are receiving American taxpayer dollars.
The letter calling for Geithner’s resignation, and “Sold Out: How Wall Street and Washington Betrayed America,” follows:
March 19, 2009
President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear President Obama,
It is clear that Treasury Secretary Timothy Geithner cannot provide the requisite independence that is required in an environment in which financial institutions and other businesses are demanding trillions of dollars of taxpayer money. With respect, we urge you to ask for his resignation.
As you know, Mr. Geithner helped orchestrate the first bailout of AIG by the Bush Administration. Both the arrangement itself and the recipients of the first $80 billion of taxpayer money provided to AIG were, and until last weekend remained, a secret. Now we know that billions of dollars were transferred from AIG to banks and other financial firms without any indication that these firms, domestic and foreign, were themselves in need of American tax dollars. Indeed, many on the list released by AIG are considered in healthy financial condition. There is no evidence that the Treasury has developed a plan to determine how and to what extent AIG’s counterparties should be paid.
The revelation of $500 million in payments of bonus and “retention” money to executives and traders who may have been directly responsible for AIG’s collapse is a profound insult to the hardworking American taxpayers who are paying for Wall Street’s excesses.. It suggests that Mr. Geithner, simply does not recognize the taxpayers’ rightful expectation that this money will not be wasted. Why wasn’t the Treasury Department ahead of this issue, making sure that taxpayer money would not be wasted on unjustifiable bonus payments?
Moreover, it would appear that the Treasury was aware that the bonuses would be disseminated by AIG on Friday – but did not release the information to the public until Saturday, when it would at least ostensibly be “too late” to do anything about it. Such a cynical strategy of deliberate non-disclosure – along with cavalier statements by representatives of the Administration that it is legally bound to honor these outrageous compensation deals – has severely undermined the credibility of the Treasury Secretary.
This crisis is the direct result of ten years of bipartisan capitulation by Washington to the demands of Wall Street to be free of proper regulation or restraint, as recently documented in our report, “Sold Out: How Wall Street and Washington Betrayed America.” You cannot be held responsible for the litany of policy errors that occurred on your predecessors’ watch. Nor was it unreasonable for you to believe that upon assuming the duties of Treasury Secretary, Mr. Geithner would bring to bear his past experience – without being limited by it. Unfortunately, that supposition has not proven out. Serious mistakes are being made on your watch. In these grave days of national reckoning, the citizenry deserves better.
It is time for Mr. Geithner to resign.
Consumer Education Foundation
PO Box 1855
Studio City, CA 91604
PO Box 19405
Washington, DC 20036