Geithner’s Plan and Inside the Meltdown
It only took a few hours after Treasury Secretary Tim Geithner announced his troubled-asset bank relief plan for House Minority Whip Eric Cantor (R-Virginia) to label it “fundamentally flawed” and a “shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it.”
While the country’s economy struggles and attempts to “right the ship” have been met with heavy partisan politics, it appears Geithner’s “bank plan” is not sitting well with every Democrat on Capitol Hill either. Democratic Rep. Brad Sherman of California criticized the plan for rescuing banks while neglecting taxpayers. This is a common refrain that’s beginning to sound like a broken record: Why are we “bailing out” banks that got us into this mess?! Trust me, I’ve asked myself this many times.
However, the problem with this line of thinking is the banks and lending institutions are not the only ones whose hands are bloody. After all, the American mortgage and housing industry does not exist without lenders, borrowers, mortgage brokers, real estate appraisers, developers, and of course…a government who chooses how each of these entities will be regulated. It’s easy to forget how we got to where we are today.
Fortunately, there are resources available to remind us. Recently, PBS Frontline aired one of their thoroughly researched and impressively concise 60-minute programs titled “Inside the Meltdown.” While the video doesn’t cover the pre-2007 housing market, it focuses on the systemic risk and difficult decisions former Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and Geitner had to make.
There are no heroes in this story, only delayed disaster at every turn. With this as a reference point, we can understand that the decisions Geithner is making today, whether right or wrong, are wrought with painful deliberation and overwhelming consequences.
- Matt
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