Von Aldo

Geithner's Lifelong Love of Bailouts

Treasury Secretary Geithner apparently has a yen for government bailouts. Cato Institute’s Mark Calabria, writing in the New York Post today, details Geithner’s role in past bailouts. Geithner joined the Treasury in 1988 and rose to “leadership positions” in 1995.

Calabria points out that financial institutions are addicted to gub’ment (pronounce with a rural, Michigan Militia accent) bailouts. It started with the Mexican “peso crisis” in 1994, when Congress refused to assist banks who were losing gobs of money when Mexico couldn’t pay its loans. Treasury intervened (in a “backdoor” fashion, says Calabria) via its Exchange Stabilization Fund. It continued during the Asian financial crisis and, when he joined the IMF, “an organization whose primary purpose seems to be to bail out U.S. and European banks when they suffer losses on developing world investments.”

Bailouts, of course, are rationalized that there is a “national-interest case for helping” in such cases. But, Calabria writes, “It remains true that Wall Street was a huge benefit of [the Mexicican] rescue—it escaped paying a price for tens of billions in foolish lending.” Calabria criticizes Geithner’s proposed financial-regulatory reforms as, at the “core,” merely giving the Fed “permanent bailout authority.”

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