Rahm On Geithner’s Plan: Wall Street Approval = The Good Housekeeping Seal
It’s understandable the White House wants to celebrate Geithner’s 500 point Dow surge as a victory, after the week Geithner had, and predictable that Rahm Emanuel would take credit. But did Rahm need to say that what’s good for Wall Street hedge fund brokers is good for America?
Today’s NYT has a front page article "Rescue Plan, With Fine Print, Dazzles Wall Street" explaining that if you give Wall Street investors billions in subsidized, non-recourse loans with which to make speculate investments with reduced risks, Wall Street will reward you with an UP day. That’s not news, nor it is surprising that when something "positive" happens, we very soon learn that the whole thing was orchestrated by Rahm Emanuel:
But the first-day verdict on the Dow Jones average went in the right direction for Mr. Geithner this time, up nearly 7 percent and 500 points, in contrast to the precipitous slide after Mr. Geithner’s first effort, when his inability to explain in any detail how the program would work left Wall Street jittery about whether the administration had a workable plan.
A Treasury spokeswoman insisted the only difference was that Mr. Geithner had the time to complete details so complicated that they amount to creating a new financial system with global reach. But beyond the substance, the administration also had a more careful plan in place to introduce the proposal, because neither Mr. Geithner nor Mr. Obama could afford another negative review.
“Did we do things differently? It’s self-evident that we did,” Rahm Emanuel, the White House chief of staff, said in an interview.
With selective leaks to the media for the last several days, the administration had time to explain the complexities in advance, preparing the financial markets over the weekend for what was coming. Mr. Geithner and other administration officials spent days briefing crucial people on Wall Street and working to line up endorsements from prominent equity fund managers and other private-sector “validators,” in particular two leading global investment management firms, BlackRock and Pimco. . . .
That’s funny, because I read at least a dozen initial reviews of the plan from those without a vested interest, and with a few cautious exceptions they almost universally panned the scheme as ineffective, delusional, premature without due diligence by US auditors, a thinly-disguised give-away to banks/investors or worse. [More NYT-sponsored debate here.] But those critics were just the folks who were right about the housing bubble, the impending financial crisis, the inadequacy of earlier plans, so who cares what they think. What matters is what Wall Street investors think:
“The private sector stepped up on the day of the announcement saying they wanted to participate, which provided a Good Housekeeping seal,” Mr. Emanuel said. “And the second thing was that the presentation was organized in a way that the expectations of the program were met by the actual program.”
Got that? If the people who brought you Countrywide and others who helped wreck the economy say this looks like a good investment opportunity, that’s the Good Housekeeping seal of approval. But if critics who called this right express concerns, well, who cares. What’s good for Wall Street hedge funds is good for America, says Rahm, and we’d better pay attention.
It’s enough to make one long for the days when what was good for General Motors was good for America. At least back then it put millions of Americans to work who could afford to buy cars.