Let's just say Stiglitz is not making an effort to suck up and win new friends in the White House, which is OK. It's not such a bad idea to hear opposing views because there does appear to be a refusal to listen to fellow Democrats on the matter of the economy. It's a concern that Obama places so much trust in the likes of Geithner and Summers as well as the teams of people from Citi and Wall Street. There's plenty of reason to struggle with trusting this team even if you don't want to accept the likelihood of conflict of interest and that's a big "if" in this case. More from Bloomberg and Stiglitz:
“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview yesterday. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”Intertwined with this is the story in today's Washington Post about the big banks who are complaining about TARP but are noticeably silent on the FDIC billions that they have received. The incredibly cheap loans have helped fluff the numbers at some banks despite their refusal or inability to pass along loans to individuals or business.
The Troubled Asset Relief Program, or TARP, isn’t large enough to recapitalize the banking system, and the administration hasn’t been direct in addressing that shortfall, he said. Stiglitz said there are conflicts of interest at the White House because some of Obama’s advisers have close ties to Wall Street.
“We don’t have enough money, they don’t want to go back to Congress, and they don’t want to do it in an open way and they don’t want to get control” of the banks, a set of constraints that will guarantee failure, Stiglitz said.
Somehow the banks never manage to properly address this FDIC money and of course, the Obama team is too involved or too close to these organizations to say much. In the case of JP Morgan - who just released above forecasted numbers for the quarter - they have borrowed $40 billion from FDIC which does not impose any executive pay restrictions. Call it a loophole or whatever you want, but it's free money without strings.
