Geithner Claims Consistency on Financial and Auto Bailouts


Geithner refuted claims that the administration had a double standard for the auto industry after President Obama's auto task force asked General Motors' CEO Rick Wagoner to step down last week.

"We've already seen very very dramatic restructuring across our financial system," Geithner said. "Just step back and look at the institutions that existed a year ago, some of the large institutions in the country – the landscape of the financial system has changed dramatically over that period of time. And where we provide assistance to the financial system, we're going to make sure it comes on conditions to make sure the system emerges stronger. There's accountability where we need to and the taxpayers' interests are protected. That basic standard and basic objective is the same across everything we're doing to help get recovery back on track. Now it is going to require different things in different cases, but if you look at where the government has already acted, we're meeting that test consistently."

I disagree.  The financial sector, to speak very broadly, got better treatment.  One glaring example is the trilliions in Fed and Treasury aid and loan guarantees to financial institutions (beyond the financial bailout proper) - which still haven't been made public despite Bloomberg's best efforts to track expenditures of federal funds.

Geithner could make a relatively simple distinction between the two bailout target industries - and get to some of the potentially legitimate reasons for treating the two realms differently.  Even figures like Charles Krauthammer have noted and backed the basic distinction, finding the financial system as a more widely essential backbone for the broader economy (an argument, admittedly, that I'm still not entirely sold on given the moral hazard it provides to big banks and financial institutions).  

Instead, Geithner is now seemingly caught in a desperate bid to stave off the populist backlash the Bush and Obama administrations have unleashed.  He claims consistency of response only by reaching up to a nebulous overarching goal of helping "get recovery back on track." In my opinion, the only consistency in the response to the two problem industries has been the excessive government intervention that rewards irresponsibility.