The WSJ today reports what everybody already knew: Little Timmy Geithner, is the world's worst negotiator. While president of the New York Fed, LTG agreed to make whole every bank which which entered into deals with AIG, including of course Goldman Sachs (LTG's most likely future employer) and Merrill Lynch. The "deals" were essentially private insurance contracts wherein AIG agreed to insure the banks against losses from bad investments made by the banks. The "deals" of course were made by the best and brightest investment bankers and insurance execs, and were reviewed by the smartest lawyers money could buy, probably $1,500 an hour guys. Now none of these really smart guys ever bothered to think about whether AIG actually had the money to make good on the insurance claims (AIG didn't have the money, which led to Little Timmy's grand plan).
Instead of saying to the banks, "You guys made some bad moves, now you need to live with it," LTG said, "Gee, you guys wouldn't be willing to take a little less than you're owed, would you?" to which the banks said, "up yours Little Timmy," whereupon LTG said, "OK, I'll make sure you get all your money, but please remember me when I'm in the job market, OK?"
Really makes you feel good about paying taxes, doesn't it?
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