U.S. Treasury Secretary Timothy Geithner needs to figure out ASAP that he is working for the President and U.S. taxpayers, not Wall St. firms and the banking industry:
Barry Ritholtz [of The Big Picture blog] says the current bailout bonanza is “absolutely asinine” and believes there’s no good reason the U.S. government should be rescuing the debt holders and counterparties of firms like AIG and Citigroup.
“Why do you and I as taxpayers have to make good some bet that Goldman or Deutsche Bank [or Pimco] made?,” he asks. “When you lend money to an insolvent institution, you’re not supposed to be made whole.”
While painful at the onset – for debt and shareholders alike – such a process would ultimately result in “a reboot – a fresh start” for companies like Citigroup, AIG and Bank of America, says Ritholtz. “Just get them out from under all of the horrific decisions their inept and incompetent management has made over the past decade.”
Ritholtz predicts Treasury Secretary Tim Geithner will eventually abandon his current strategy of trying to keep zombie banks alive by any means possible.
If not, “I wan to get long torches and pitchforks because eventually the taxpayer is going to figure out how badly they’re getting screwed,” he says – only half-jokingly.
The video interview of Barry Rithotz is worth watching. Click here.