Posts Tagged: Timothy Geithner

American Society / Banking / Business / Corporate Behavior / Political / law — 0 Comments
20
Jul 10

Team Play: How to Lose the Game

Corporations and politicians love to emphasize “team play.”  A whole mythology surrounds the concept.  There are 1,800,000 Google search results under ‘team play.” Websites are devoted to “team building,” “effective team work” and “team play.”  Corporate and political entities adopt sports analogies and metaphors for success: teams that play together as a unit win.  Thus, if we convince independent and sometime maverick executives to sublimate their needs to the “team,” the team will be more successful, that is, win more.

By extension, we obviously must isolate and demonize the non-team players.  Those who have not embraced team play are mavericks, lone wolves, naysayers, whistleblowers or worse.  If we round up these “stray camels” and get them all under the corporate tent, how much better off will we be?

Team Play Sounds Great, Right?

Superficially, ‘team play” sounds like a great concept: everyone on “the same page,” effectively communicating, sublimating individual ego and producing outstanding results.  But there is a more insidious inner lining to team play.  ‘Team play” is a way of quashing independent thought and dissent.  What upper management or senior government officials really want is an employee who will carry out directives from above blindly, without assessing the wisdom or integrity of a particular strategy or project.  This paradigm values adherence to “the program” and loyalty over competence.  Even when some thoughtful criticism can produce a much better result, the team will value mediocre results.

Unfortunately, “team players” get promoted disproportionately, perpetuating the “team play” cycle.  Those not promoted learn an important corporate lesson:  “go along” and “get along” or look for other opportunities elsewhere.

I am not privy to BP succession planning, but I would guess the lead management representative on the Deepwater Horizon rig was the consummate team player.  One has to wonder if common sense came in second place to “team play.”

The Strange Case of Elizabeth Warren

Elizabeth Warren, a Harvard law professor, was named chair of the Congressional Oversight Panel looking into the bank bailout program (“TARP”).   Unfortunately, Prof. Warren had the temerity to grill Secretary Geithner on the AIG bailout and backdoor assistance to Goldman and other banks.  Indeed, by doing this she was questioning the wisdom and integrity of a measure that would ensure that these banks would be paid in full on credit derivative positions with the failed AIG.

Ms. Warren is the champion of establishing a consumer financial protection agency.  The new bill establishes a new Consumer Financial Protection Bureau.  Knowledgeable financial commentators such as Yves Smith and Simon Johnson believe that Prof. Warren would be the right person to head the new bureau.

Warren is the obvious choice to head the otherwise-guaranteed-to-be-a-joke consumer financial services agency due to set up its shingle at the Fed. She has been a tireless consumer advocate, is trusted and well liked by the public at large, an effective communicator and a respected legal scholar, and is willing to stare down political opponents. All those qualities make her hugely threatening. Banksters and their lobbyist allies have been saying loudly and clearly that they are firmly opposed to having Warren head the new consumer agency. So, predictably, Geithner acts as their water-carrier. See Elizabeth Warren in Treasury Crosshairs Again

Mr. Geithner has proved to be a toady for the big banks and Wall Street firms. Of course, he would like to block  Ms. Warren’s appointment.  He instead wishes to install a “team player” such as his pro-bank rubber stamp lieutenant, Michael Barr, Assistant Treasury Secretary.  Mr. Barr’s bona fides are set forth:

This Administration has acted quickly and aggressively to confront the economic challenges facing our economy and the housing market. See Elizabeth Warren or Bust, I’m Drawing the Line

No comment is required.

Afflicting the Comfortable

Humans are tribal. We are comfortable with our own tribe and team.  Along comes an individual of integrity, conviction and unquestioned competence like Elizabeth Warren.  Those individuals attack “group think,” upset the powers that be and make some  a little uneasy.  Suddenly, the name calling comes out and Prof. Warren is called a “commie” or a “weirdo” because she questioned the overly cozy relationship between the Administration and the banks.   Moreover, perhaps hidden in the discomfort is the fact that she is a female in the largely male world of banking and the Treasury.

Undercutting the maverick in a corporation is a little more subtle:  is the person sound, can we rely on him in a pinch, or isn’t he a little different from us?

For the sake of the country, we need more more mavericks like Prof. Warren.   Sometimes it is good to afflict the comfortable.

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American Society / Business / Financial / Political / Regulation — 0 Comments
2
Feb 10

Timothy Geithner and Plausible Deniability

Congressional hearings often make wonderful theater.  Last week at the House Oversight and Government Reform Committee, the American public heard testimony from Timothy Geithner, former head of the Federal Reserve Bank of New York and now US Treasury Secretary and Henry Paulson, former US Treasury Secretary.  Both men’s testimony relied on one premise: if we did not bail out AIG and pay its counterparties 100 cents on the dollar, the financial world as we know it would have ended,  i.e., the US would have plunged into a second Great Depression.  By written statement, Fed Reserve chair Ben Bernanke informed the Committee of his full support for this decision.  In person, Henry Paulson agreed.  However, both men said they had nothing to do with the decision.  Further, Mr. Geithner testified that he had relied on his staff or details of the bailout.  And even further than that, he later distanced himself from the decision whether nor not to disclose the details of the bailout. America was treated to the concept of “plausible deniability.”

Plausible Deniability

Working in a corporation one gets a firsthand look at the concept of “plausible deniability.”  Plausible deniability works something like this: a crisis starts; an important decision must be made; a senior executive is charged with making a decision; the senior executive delegates much of the preparatory work to  staff or a trusted lieutenant; the staff or trusted lieutenant ultimately makes a recommendation which later becomes “The Decision. “  If or when something goes wrong in the future, the senior executive denies involvement and places the blame on the staff or the trusted lieutenant.  Almost every time, the superiors of the senior executive accept this scenario.  The senior executive survives.

Let’s Get Real

Harry Truman said “the buck stops here,” meaning that the most senior executive has ultimate responsibility for a decision.  Perhaps with President Clinton or at some time it became fashionable for the senior person to distance himself from the decision so that he would have plausible deniability.  Further, it was expected that subordinates would “throw themselves on their swords” to preserve their boss.

It stretches credulity that the three most senior financial executives in government, The Chairman of the Federal Reserve, the President of the New York Federal Reserve and the Treasury Secretary did not know the intimate details of the AIG bailout.  At stake at the time was $62b of taxpayer money to effect this phase of the bailout.  All three men agree that if the bailout did not take place financial Armageddon would have ensued.

More is expected of our public servants. We appointed these individuals because of their unique skills, judgment and character. Apparently, these individuals were unavailable in the AIG crisis to make critical decisions.  Based on these stated actions, I deplore the confirmation of Ben Bernanke.  Moreover, I would ask for the resignation of Timothy Geithner.

It is time that high level government officials took responsibility and become the watchdog of the public purse. Trying to blame subordinates should elicit the response from the public: “that dog won’t hunt!”

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