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CNBC to Geithner: Is the U.S. like Venezuela?

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Published March 23, 2009 at 3:27 PM

The Obama administration has finally taken the wraps off of its bank bailout plan, and sent Treasury Secretary Tim Geithner on a media tour to sell it. In addition to a Wall Street Journal interview on Sunday, he spent some time chatting with CNBC's Erin Burnett, who put forth a strange question comparing the U.S. bailout to Venezuela's nationalization of major industries:

BURNETT: "Along these lines, someone said last week, who is a very respected investor, 'I'm now putting a risk premium--as in, the risk that my investments could go bad--to invest in the United States like I would in Venezuela.' That investor was only partially joking. And part of that was because there is uncertainty about the rules, there's uncertainty about whether the rules are going to change after, you know, you said, 'I'm going to do it this way,' and then, 'Oh, guess what, I'm going to go change it.' You're one of the guys trying to set the rules. You're sort of that broker between the administration and between the people who are going to invest money. How does that make you feel when you hear someone says invest in the United States like investing in Venezuela?"

However, Geithner didn't take the bait, and instead offered a canned response that entirely ignored the comparison to the socialist South American nation:

GEITHNER: "Our obligation is to make the American people confident that we're going to use taxpayer resources in ways that, again, that are get--going to get credit flowing again, get recovery back on track, and are not going to be abused to reward failure. That's a--that's a difficult balance to strike, but we're going to work through this and, working with the Congress, we're going to find the right balance."

While the Venezuela comparison was likely intended to highlight the capricious nature of Congress' efforts to put limits on Troubled Asset Relief Program recipients after the fact, oddly, Burnett never returned to the Venezuela comparison, which has regularly canceled contracts via presidential decree, even when she asked the following question about abrogating American International Group Inc.'s (NYSE:AIG) compensation agreements:

BURNETT: "Last week you'd said that you'd looked into those AIG bonuses, and legally they had to pay them. Larry Summers said this country does not abrogate contracts. But then the president came out and said, `Secretary Geithner, go back and find a way to get that money back.' Are you going to get it back?"

GEITHNER: "The president asked us to explore--and we're working very carefully with Justice to examine all legal means to see whether we can recoup those payments. I believe said he's working with--working to get that money back. And we're going to make sure that the taxpayer is compensated for any funds that aren't returned."

See the full transcript at CNBC.com. - Matthew Wurtzel

Also see:

Corporate Dealmaker: Economists critiquing Geithner's bank plan
Dealscape: Stocks rally, but bloggers dis Geithner plan

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Comments

From: Erich Riesenberg,

It is confusing there is so much effort to refer to current US policy as socialist when it is clear we are engaging in crony capitalism, rather than socialism. Private interests are not being abrogated by the state, they are being enhanced, at great taxpayer expense.

The word socialism and the phrase fiat currency are the most overused terms on financial blogs.

Posted on: March 23, 2009 4:23 PM


From: Chris M,

Nice article. That is exactly right - Geithner is like a self-imposed broker between investors and the public. There is something about him that is decidedly untrustworthy.

Posted on: March 23, 2009 4:49 PM


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