G-20 Summit — Time to Get Down to Business

Treasury Secretary Tim Geithner is a smart guy. I know it in my heart. I also know he has a tin ear when it comes to politics in this town.

Some would say that’s a good thing, but his latest actions have many on Capitol Hill and even in the economic community scratching their heads, wondering when he intends to return to the 800-pound gorilla in the room and actually produce a bank recovery plan.

This is one area where Republicans have seized the initiative, and repeatedly beat up the Treasury Department, for good reason. The first time Geithner supposedly unveiled a plan, the Street panned it as a set of weak talking points, full of concepts but no concrete details.

The markets responded swiftly, falling hundreds of points. Still today they are struggling, even as homeowners struggle to make ends meet. A market analysis released yesterday by the research firm RealtyTrack showed foreclosures had spiked 6 percent for the month of February. That number is staggering when you consider that many banks publicly announced they were suspending foreclosures in January. Never mind the fact that the messianic Troubled Asset Relief Program (TARP) was supposed to help bail out struggling homeowners. And yet, 290,000 homeowners last month received notice they were in default or close to foreclosure proceedings. Treasury’s response? “We’re working on it. Meantime, how about we cut the mortgage interest deductions for the wealthy to help pay this bill” … ?!

Secretary Geithner gets another chance this weekend, when finance ministers from the G-20 convene to discuss a host of issues. Papers today forecast a hard push by Geithner to boost money for the International Monetary Fund (IMF). Geithner also wants his counterparts to commit to spending 2 percent of their country’s GDP in stimulus.

He can’t be serious. Before the session even commences, economic ministers are dubbing it more of the same traditional American “leadership” that got the world into this mess to begin with. I would expect no one to go along with that plan. In fact, only China and the U.S. have pledged such enormous sums. Notwithstanding the fact that the U.S. wields no credibility in the financial space today, after years of “do what feels good” policies, it’s also failed to address the root causes yet. Bottom line: We had a massive credit bubble that burst with a volume of lending that was out of control, and now the American remedy is more lending and more spending? Even Tom Clancy couldn’t make this plot sound more ludicrous.

I’m not optimistic regarding the G-20 meeting this weekend, but if President Obama wants to build on any momentum for the larger G-20 summit of his counterparts, then it’s time Tim Geithner got down to business or admit that he’s in way over his head as Treasury secretary.

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