Ezra Klein

IS TIM GEITHNER TOO BIG TO FAIL?

Tim Fernholz rounds up some evidence that Geithner's political acumen is, err, less than Emmanuel-esque, and quotes Politico 's speculation that Tim Geithner is simply "too big to fail." That may be true. On the other hand, you could also say that Geithner is particularly well-placed to fail: He has been simultaneously presented as being somewhat hapless and yet somehow completely responsible for the whole of the Obama administration's response to the financial crisis. Peter Orszag tells Jon Stewart that “I have to be more constrained, because [the bailout] really is Geithner’s." People around Summers say that "when it comes to the bank bailout, the consensus is that Summers has scrupulously respected Geithner's turf." If the day ever comes, in other words, that the administration needs to radically change course, they can jettison Geithner and lay the whole thing in his lap.

THE 25 SUBPRIME KINGS SPENT $370 MILLION IN LOBBYING.

I've not seen it getting much play in the blogosphere, but the Center for Public Integrity unveiled a hefty new web site tracking the subprime efforts, lending standards, and lobbying dollars of the major banks. The point of the report is simple: They meant to do this. Not "this" insofar as it means getting their compensation capped and falling into insolvency. But "this" insofar as it means popularizing subprime loans. As CPI writes, "These big institutions were not only unwitting victims of an unforeseen financial collapse, as they have sometimes portrayed themselves, but enablers that bankrolled the type of lending that has threatened the financial system." There's even a widget. (The widget broke the blog. The widget is evil. The widget hates you. Beware!) It's a convincing presentation. But the piece that got front page play in The Financial Times is the lobbying bit: "The top 25 US originators of subprime mortgages -- the risky assets that sparked the global financial crisis --...

IS CHUCK GRASSLEY A PLOTTING, CONNIVING, BACK-STABBING TWO-TIMER? OR JUST A SENATOR?

I don't really understand the framing of this Hill story . "Grassley plots backup healthcare plan?" Plots? Seriously? The basic story is that Chuck Grassley, the ranking Republican on the Finance Committee, is working with Max Baucus on a bipartisan bill. He's also working with the Republicans on their alternative bill. Is he -- gasp! -- double-crossing his buddy Max Baucus? Are they now in a fight? I doubt it. Baucus is presumably helping the Democrats craft whatever bill they'll use if they need to go through reconciliation. He didn't block the inclusion of reconciliation in the budget. There are no surprises here. People want bipartisan agreement but aren't banking on it. The relevant senators in both parties are participating in negotiations even as they review plans for war. The interesting piece of the article quotes Grassley as saying that "budget reconciliation changed everything." But as a smart staffer argued to me recently, it turns out that budget reconciliation changed...

IS CONGRESS TURNING TOWARDS SOCIAL SECURITY REFORM?

Steny Hoyer, it seems, is making some noises about Social Security reform. Good luck with that, I guess. The interesting nugget in the article, however, is that "House and Senate leaders have resisted the idea of naming a special commission to work on the problem, insisting that congressional committees can handle it." Hoyer is, of course, one of those leaders. And this makes Social Security reform much harder. What liberals fear on Social Security reform is something like the proposed Conrad-Gregg Commission. A bipartisan commission that creates a set of recommendations and then fast tracks them through Congress. In general, the idea behind these proposals is that Congress can't change the commission's recommendation: It just votes up-or-down. Trying to run entitlement reform through the normal congressional process is like trying to run the Iditarod on a tight rope: You can't balance the two sides. A solution conservatives will support would be anathema to liberals. A solution...

FORMING A UNION: THE VIDEO.

The folks over at the Center for American progress Action Center put together a nice video explaining the how the "election" process that unions have to go through makes it nearly impossible to form a union. Particularly important is that this election doesn't look anything like what people think of when they hear the word "election." Imagine if during the presidential campaign, your supervisor could pull you into a room and explain slowly and clearly why it was very important to the company that you supported John McCain. And then, if you said you didn't, you might mysteriously find that you were working bad shifts the next week, while your friend who attached the complimentary McCain/Palin sticker to her car is suddenly getting the prime slots. I continue to think that the unions made a terrible mistake emphasizing their solution to this problem (card check) rather than the problem itself. But their bad strategy doesn't obviate the need to reform blatantly anti-worker laws.

EXCLUSIVE: MAX BAUCUS'S HEALTH CARE TEAM.

I mentioned yesterday that Chuck Schumer's public plan compromise wasn't a freelance effort: Max Baucus had deputized him to work through the options on the public plan. But he's not the only Finance Committee member that received some homework from Baucus. In fact, Baucus has given every Democrat on the committee a different piece of health reform to focus in on. Sources say that some are taking them more seriously than others, and obviously no single senators gets the last word. But the assignments have been a way for Baucus to delegate some of the work and involve all the Democrats on the Finance Committee. This is the list: Jay Rockefeller: Medicaid Expansion, Premium Subsidies, Quality Improvements Kent Conrad: Comparative Effectiveness, Chronic Care Management Jeff Bingaman: Pay-for-Performance, Bundled Payments, IHS John Kerry: Heath Information Technology, Exchange, Small Business Tax Credit Blanche Lincoln: Small-Group Rating Reforms, Small Business Tax Credit Ron Wyden: Tax...

DOING NOTHING ON CLIMATE CHANGE IS EXPENSIVE.

My new employers sure seem to spend a lot of time publishing columnists who are critical of climate science and then publishing op-eds and arguments that essentially trash the take of the original columns. The latest example comes in response to a frustrating effort by Robert Samuelson that took issue with the uncertainty in the models climate scientists are using. Paul Krugman had a very elegant rejoinder to this over on his blog a few days ago. But today, the op-ed page published a reply from Kristen Sheeran and Mindy Lubber, and they make a point that deserves wider airing: [Samuelson] assumes that all costs involved in mitigating climate change -- and there will be costs -- represent new costs, without acknowledging the massive error in our market system that equates the price of carbon emissions to zero. This fundamental error skews everything that follows, because if emitting carbon costs nothing on a balance sheet, all steps to reduce pollution count as "new costs." The real...

THE LIBERAL CRITIQUE OF WYDEN-BENNETT (WONKY).

I'm on the record in my admiration for the Wyden-Bennett health reform plan. I think it's better than what Barack Obama offered during the campaign and better than what we're likely to get come the end of this process. I explain why here . But the Wyden-Bennett plan tends to be very popular among people who are interested in health economics and somewhat less popular among more traditional health care advocates. And they make a good point. In my experience, their problem is not, as Jon Cohn suggests , that "liberals don't like the Wyden-Bennett plan...primarily because it lacks a public insurance option." That's a problem, but given the radicalism of the proposal, I'd take the trade. Rather, the concern is with the guts of the Wyden-Bennett cost control mechanisms.

REID GETS TOUGH ON SPECTER.

On Meet the Press last weekend, David Gregory asked what "inducements" Arlen Specter had been given to switch parties. "None," replied Specter. "None?" asked, incredulously. "None," Specter replied. Gregory still didn't believe him. "You won't retain your seniority, as you move over, on, on key committees?" Oh. "That's an entitlement," said Specter. "I've earned the seniority. I was elected in 1980. And I think that's, that's not a bribe or a gift or something extraordinary. I will be treated by the Democrats as if I'd been elected as a Democrat." That was the original deal, anyway. Reid promised him seniority. That would have made him the seventh most senior Democrat in the chamber. But Specter wasn't elected as a Democrat. Nor has he been acting like one. And so his colleagues appear to have decided to stop treating him like one. In a voice vote last night, Senate Democrats stripped Specter of seniority. That makes Specter the most junior Democrat on four of his committees, and the...

BANK OF AMERICA: PRETTY STRESSED OUT.

A couple days ago, we were hearing leaks from "people familiar with the matter" who said that the stress test's "preliminary findings have revealed that Citi, which has already been bailed out three times by the authorities, could need an extra $10bn or more if the economy worsens. BofA, which has had $45bn in government aid, was found to need well in excess of $10bn." Today, we're hearing that "well in excess of $10 billion" means an eye-popping $35 billion. As Kevin Drum notes , that's nearly half the value of the entire company. BofA either needs to raise this money on the private market or come back for more government funding (which could take the form of TARP funds or equity purchases or something else I probably haven't thought of). They're promising to find it on the market, but that seems virtually impossible. J. Steele Alphin, the BofA executive dispatched to give the Times some calming quotes, is keeping a brave face, however. “We’re not happy about it because it’s still a...

DETROIT IS NOT TOO BIG TO FAIL. POOR THEM.

Harold Meyerson's Post column notes one of the more galling policy contrasts going today: The difference between the auto and banking bailouts. As Harold says, the auto bailout "gives the public a stake in the company in return for its loans...scraps the old management and board of directors, and downsizes the company to a point where the government believes it can become profitable again." Conversely, in bailing out Wall Street bailout, "Treasury has not opted for structured bankruptcy, has not converted its loans into shares, has not forced out top executives, has not moved to make banks smaller." Why, Harold asks, is there such a difference? "Could it be that the leaders and folkways of American banking are familiar to the men who run the Treasury, while the leaders and folkways of the American auto industry are not -- meaning that they can assess Detroit more dispassionately than they can Wall Street?" That could certainly be part of it. And emotionally, I'm sympathetic to that...

IN PRAISE OF SOTOMAYOR.

I don't have a particular opinion on Sonia Sotomayor, the Second Circuit Court judge who has emerged as an early frontrunner -- and an early point of controversy -- for David Souter's replacement. But having mentioned Jeffrey Rosen's article quoting anonymous associates of Sotomayor who oppose her nomination and question her intellectual capacity, it's also worth excerpting this missive from Professor Robin Kar, a former Sotomayor clerk who's not afraid to sign her name when she opines on her former boss: I count myself privileged to have worked closely with some of the very best minds in the world, in both law (at Yale Law School and in the legal academy) and philosophy (at both Harvard College and the University of Michigan’s graduate school, which was widely considered the best department in ethics in the world when I was there.) Judge Sotomayor stands out from among these people as one of the very brightest; indeed, she is in that rarified class of people for whom it makes sense...

BRAD DELONG IS HAPPY.

"Libor" is the London InterBank Offered Rate. Effectively, it's the interest rate at which banks in London borrow from each other. It's an important number because the financial sector uses it to figure out how to price mortgages, loans, bonds, and much else. When it's low, that's a good thing: It means banks feel pretty confident lending to one another. And it's pretty low right now. The three-month rate is at a record low, in fact. And that's good. How good? Brad DeLong says , "Now I am happy. Now I see 'green shoots'."

GOVERNMENT TO BANKS: NO FRIENDS WITH BENEFITS.

Tim Geithner is set to decree that if banks want to repay their TARP loans and slip out of the compensation caps and oversight rules that come with government backing, then they'll have to also sacrifice the sweet, sweet lending arrangements the Feds have been giving them through the FDIC. In other words, you can't only leave the government subsidies you don't like. The bottom line for the banks is that if they want out of TARP, they have to be able to withdraw from all the other sources of emergency public support that the government has given them. If they want the support, then they have to agree to the conditions and regulations that come with TARP. No subsidies without regulations. To put it into more common terms, banks can decide to break up with the government or they can decide to stay together. But they don't get to be friends with benefits.

TAB DUMP.

• Will Obama get more involved in health care? • We can't subsidize the banks forever. • How David beat Goliath. • More bang for the health care buck. • Can we really trust a president who orders his burgers medium- well ?

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