Treasury Secretary Timothy Geithner is doing a great job, according to none other than himself.� Geithner essentially patting himself on the back at a Bloomberg Breakfast event in Washington on Wednesday, saying: "The core of the American financial system is in a much stronger position than it was before the crisis."
Geithner has a point: U.S. banks made $87.5 billion in last year, the highest since 2007, according to the Federal Deposit Insurance Corp., Bloomberg reports.
Of course, as Henry points out in the clip, if the system is indeed safer, it's solely because Geithner, his predecessor Hank Paulson and Fed chair Ben Bernanke have done a heck of a job bailing out the banks.�
If you couple zero percent interest rates with the backdoor bailout of Fannie Mae and Freddie Mac that allows banks to off-load all their crummy mortgages, it's pretty hard for banks to run into trouble. Plus, all the stimulus has helped drive stocks 60% higher since March 2009.
On the other hand, as Aaron mentions, the system still remains fragile because of a "Too Big to Fail" policy that really hasn't been addressed.� President Obama claims the Dodd-Frank bill eliminates this policy but we'll reserve judgment until the next crisis.
Meanwhile, market measures such as the spread between junk bonds and Treasuries suggests market participants are once again "reaching for yield," which is big part of what got the system into so much trouble in the first place.�
What do you think? Are we safer today than we were before the 2008 crisis?
No comments:
Post a Comment