At IMF, Egypt for G24 Bemoans US Block on Quota Reform, Flaherty RIP, Few Questions: A FUNCA Proposal

By Matthew Russell Lee

UNITED NATIONS System, April 10 -- When at the IMF three ministers atop the G24 group of developing countries took the stage at 6 pm on April 10, they were fired up about, or against, the US Congress refusing to adopt the so-called quota reform.

 G24 chairperson Ashraf El Araby of Egypt raised the issue. The first questioner -- one of only three, from a total of two media -- asked what will you do if the US doesn't agree to reform in six months?

  All options must be considered, Amar Bhattacharya of the G24 Secretariat said. Another questioner from the same media asked if loans contingent on the reform might be called in. Amar Bhattacharya said that would have to be considered.

  The only other questioner went big picture, asking if the situation of Ukraine and Russia was casting a shadow on the IMF and World Bank meetings. Senior IMF Communications Officer Silvia Zucchini said the G24 wasn't the right group to answer that. And it was over.

  The Free UN Coalition for Access would suggest that for such press conferences the IMF use the technology it uses for its usual biweekly briefings, where accredited journalists can pose questions online from elsewhere. Inner City Press had questions, but no way to ask there. Here was Inner City Press' G24 coverage from two years ago.

  This Spring's meeting has coincided with the death of former Canadian Finance Minister Jim Flaherty. Here is a 2012 Q&A with him, about the Volcker Rule and Tim Geithner, now cashed out to Warburg Pincus. They're cashing in on the Umpqua - Sterling Bank merger -- but that's another story.

  After Congress dropped International Monetary Fund reform from its legislation on Ukraine aid and sanctions, earlier today IMF Managing Director Christine Lagarde calls the decision "utterly disappointing."

  In her embargoed "Global Policy Agenda," Lagarde returns to the theme: "The delay in making effective the 2010 reform package is utterly disappointing... These reforms are
essential to ensure the continued legitimacy, relevance, financial strength, and effectiveness of the Fund. Next steps will build on the advice of the Chairman of the International Monetary
and Financial Committee in his consultations with the membership regarding available options to complete the current round of the quota and governance reform process, with the objective of completing the 15th Review by January 2015."

 Seems like speaking with Rand Paul et al might be a good idea.

  Lagarde also brags that "several new lending programs have been put in place, including to support Armenia and Albania, while Poland, Colombia, and Mexico continue to benefit from added liquidity buffers through the Flexible Credit Line. Myanmar completed a staff-monitored program that has triggered debt relief from the Paris Club, and a major effort continues to build capacity in key areas of macroeconomic management."

  Lagarde has no mention of the violence in Rakhine State, nor of the Rohingya being excluded from the UN-funded census.

   Back on March 27 it was 4:25 am in New York and Washington when the International Monetary Fund announced its preliminary agreement for a $14 - $18 billion loan program with Ukraine. 

 Inner City Press asked the IMF to confirm or comment on reports that the Ukrainian "increase the price of natural gas for household consumers by an average of 50%" is attributable to the IMF. 

  At the IMF's 9:30 am embargoed briefing, IMF deputy spokesperson William Murray read out the question then said that the program has five components, including energy sector reform.

  He said Ukraine will reduce subsidies to the energy sector, and that current prices in Ukraine are two to three times lower than in neighboring countries. He said, as it did to other questions, that responses were given in a press conference in Kyiv.

 In New York at the UN, a General Assembly meeting started at 10 am. Russia's Ambassador Vitaly Churkin recounted history and said radicals "called the shots" in the change of government. We've noted that UN Secretary General Ban Ki-moon met with the leader of the Svoboda party while in Kyiv.

  In Washington later on March 27 the US Congress is expected to act on a $1 billion loan guarantee to Ukraine, but not on the IMF changes the Obama administration requested. Obama Press Secretary Jay Carney issued a statement welcoming the IMF preliminary deal, concluding that "We also remain committed to providing the IMF with the resources it needs – in partnership with Congress – to provide strong support to countries like Ukraine as well as reinforcing the Fund’s governance to reflect the global economy."
  
  Two weeks ago on March 13, the day after several US Senators argued that International Monetary Fund quota reform would have to be approved by Congress to enable the IMF to meaningfully assist Ukraine, Inner City Press asked IMF spokesperson Gerry Rice if this is true. Video here, from Minute 12:05.

  Rice genially said several times that the question couldn't or wouldn't be answered while the IMF mission is “in the field” in Ukraine. He initially gave the same answer to Inner City Press' question that had nothing to do with Ukraine: is it true, as Russia reportedly argued at the most recent G-20 meeting, that quota reform could be accomplished without US approval, under some set of rule changes?

  Rice during the briefing repeated this could not be answered while the mission is in Ukraine. Later it was conveyed that the reform is not possible without US approval. The answer is appreciated: a benefit of asking in person. But Inner City Press (and the Free UN Coalition for Access) hope to make the online asking of questions work better from now on. 

 And on March 27, for example, IMF deputy spokesperson William Murray read out this question from Inner City Press:

"On Zimbabwe, please confirm IMF is re-opening its office and respond to Finance Minister Patrick Chinamasa saying part of the deal included cutting Zimbabwe's wage bill from 70 percent of the budget but this pledge will not be met, 'addressing it overnight would mean very drastic measures which I indicated to them (IMF) I am not prepared to take. That would mean retrenchment of civil servants.'"

  On March 27, Murray said he would not comment directly on what the Finance Minister said, but pointed to a press release we will add a link to.

  Back on March 13 in another non-Ukraine question, Inner City Press asked Rice about a book published earlier this week in Hungary, that the then-economy minister in 2011 told Goldman Sachs that the government would be going to the IMF for a program. Since much currency trading ensued, Inner City Press asked if the IMF has any rules limiting its government interlocutors from trading on or sharing insider information.Video here, from Minute 31:12.

  Rice said there are confidential provisions. But are those only for the contents of communication and not the existence of communications or negotiations? We'll see.

  

As Sandy Silences UN Worldwide, Bloomberg Chats with Geithner, Disses Bronx

By Matthew Russell Lee

UNITED NATIONS, October 29 -- As Hurricane Sandy was bearing down on New York on Monday afternoon, the United Nations was closed shut. A few staff members and diplomats moved cars in the UN's underground garage. The East River rose; on First Avenue tourists stared forlornly in at the bent-up gun meant to symbolize the UN's work for peace.

  The actual work wasn't going so well. Secretary General Ban Ki-moon was out of town in South Korea, from which he expressed belated disappointment on the immediate breakdown of a much hyped ceasefire in Syria. 

  The UN told Inner City Press it had nothing new on Myanmar since four days previous, despite ethnic cleansing and murder of stateless Rohingya. There was no word offilings about bombings in (and by) Sudan.

  As of 6:40 pm on Monday, no daily "highlights" or statements of any kind had been posted on the UN Spokesperson's website. One wag wondered, has the whole world stopped? Various countries' mission to the UN announced their staff would be working, from home.

  In Moscow, Syria envoy Ladkhar Brahimi assured reporters that the UN was not sending peacekeepers, only making plans through its Under Secretary General Herve Ladsous, who closed down the first UNSMIS mission andrefuses to answer any Press questions about safeguards.

  On 48th Street a tree fell down. The UN announced it would be closed for a second day on Tuesday. Cancellations included a Security Council session about Somalia, and press conference on the right to water on "human rights and transnational corporations."

  New York Mayor Mike Bloomberg appeared at a press conference and reflexively defended the construction conglomerate Bovis, despite its 57th Street crane collapsing and its involvement in the Deutsche Bank building scandal.

  Bloomberg recounted that he had spoken not only with President Barack Obama but also Treasury Secretary Tim Geithner. One wondered, why Geither and not for example Ben Bernanke of the Federal Reserve? Geithner's name has been floated after he leaves government "service "as moving to Citigroup, a post once held by "Sandy" Weill.

  In comments echoing previous Mayor's dismissal of New York City's outer boroughs, Bloomberg said the City's system is getting too many 911 calls from Queens. 

  Meanwhile in at the Kingsbridge Armory in The Bronx, National Guardsmen were mobilized to help people in, yes, Manhattan. And so it goes. Watch this site.

At IMF, Canada's FinMin Flaherty Tells ICP Glad for Delay of Volcker Rule, Geithner

By Matthew Russell Lee

WASHINGTON DC, April 20 -- The Volcker Rule on proprietary trading by banks was one of the responses to the subprime financial meltdown of 2008. 

  On Friday at the IMF, Inner City Press asked Canadian Finance Minister Jim Flaherty about what it has reported as the Group of 20's opposition to the rule, especially for its treatment of non-US sovereign debt.

  Flaherty told Inner City Press, "it came up informally a couple of times... I can tell you, Canada is please there's been delay in planned implementation date, concerned about extraterritorial effect, I've discussed with Secretary Geithner and we look forward to further developments."

  Geithner, as we've noted and even asked the US State Department to explain, did not show up for the Finance Ministers meeting about Rio + 20 and sustainable development held Friday at the World Bank. But has Geithner given Flaherty some re-regulatory assurance?

  Flaherty was also asked about a "disagreement" he had with Germany's Finance Minister Wolfgang Schauble, concerning whether European countries were doing enough about their crisis to avoid Flaherty's requested veto and loss of European seats in the IMF. 

  Flaherty said he's known Schauble for as long as he's been Germany minister, Flaherty has served longer. Could that be the problem?

Inner City Press asked him directly, beyond the alleged differential treatment of sovereign debt, if the mixing of banking and proprietary trading played a role in the meltdown.

  "We're all entitled to our views," Flaherty replied. "In the Canadian situation, proprietary trading was not an issue for us. Some would argue it was not causative. I'll leave to others to debate." Yeah - while he whispers to Tim Geithner about it, then at the G20 in Mexico.

  Later Friday afternoon outside the IMF a protest marched by, to chants including Occupy Wall Street. Few journalists looked up from "making the donuts," so to speak, packaging Christine Lagarde's canned quotes to Charlie Rose as news. And so it has gone at the IMF. Watch this site.

Geithner Promotes Megabanks' Monopoly, in DC as at Fed, 17 Cut to 7 on Derivatives

Byline: Matthew R. Lee of Inner City Press on Wall Street
www.innercitypress.com/bb1monopoly032809.html

NEW YORK, March 28 -- Seven megabanks' renewed grab for monopoly power in the over the counter derivatives market shows how little Wall Street's real power has changed in the transition from the Bush to Obama administrations.

The banks, including Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank, are paying over $1 million to p.r. firm Prism Public Affairs to "educate" the voters weary of bonus and bailouts that those who caused the crisis should benefit from it.

Already, Congress members hungry for campaign contribution have submitted to closed door briefings by Ed Rosen of the law firm Cleary Gottlieb, who drafted the legislative language for monopoly.

The connector in this story is Timothy Geithner, under Bush the president of the Federal Reserve Bank of New York and now Obama's Treasury Secretary. Geithner in June 2008 convened closed door meetings with 17 banks, essentially allowing them to propose and draft their own rules for the derivatives market.

This led to advocacy by the Fair Finance Watch that Geithner's meetings were in fact rule making that excluded the public in violation of the Administrative Procedure Act, and by Inner City Press, as media, to get the meetings opened to journalists and the public.

The Administrative Procedures Act (5 U.S.C. Section 553) and related laws require that when the government engaged in rule-making, it must provide notice to the public, and allow and weigh public comments. The New York Fed under Geithner tried to rule-make without any involvement by the public, even the public most impacted by the subprime lending that underlies these processes. The New York Fed on June 9, 2008 met with a group of the largest banks to discuss, according to the Geithner himself

"Regulatory policy. These are the incentives and constraints designed to affect the level and concentration of risk-taking across the financial system. You can think of these as a financial analog to imposing speed limits and requiring air bags and antilock brakes in cars, or establishing building codes in earthquake zones. Regulatory structure. This is about who is responsible for setting and enforcing those rules. Crisis management. This is about when and how we intervene and about the expectations we create for official intervention in crises."

Press accounts made clear that the financial instruments and regulatory issues discussed behind closed doors are related to issues of public interest, which in fact are disproportionately impacting low- and moderate- income people and communities of color -- subprime and predatory mortgages.

The financial institutions invited, in mid 2008, were:

Bank of America, N.A. - Barclays Capital - BNP Paribas - Citigroup - Credit Suisse - Deutsche Bank AG - Dresdner Kleinwort - Goldman, Sachs & Co. - HSBC Group - JPMorgan Chase - Lehman Brothers - Merrill Lynch & Co. - Morgan Stanley - The Royal Bank of Scotland Group - Societe Generale - UBS AG - Wachovia Bank, N.A.
Buy-Side Firms: AllianceBernstein - BlueMountain Capital Management LLC - Citadel Investment Group, L.L.C.

Fast forward to March 2009, with Geithner despite tax evasion installed as Obama's Secretary of the Treasury, and with Lehman have failed and Wachovia been swallowed by Wells Fargo. Now he is promoting monopoly powers in the market for an even smaller group of banks, just seven: Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Barclays, Credit Suisse and Deutsche Bank -- which despite European headquarters received billions of dollars in U.S. Troubled Assets Relief Program bailout funds through AIG.

Now the idea is to formalize the monopoly through legislation, not rule making. Industry friendly Congress people like Connecticut's Chris Dodd are supporting the monopoly for the privileged. The fig leaf policy argument is that derivatives should runs through regulated banks. The push is made now, before it is formalized that non-banks, too, are regulated. It is a pure power grab, with Timothy Geithner as the connector. And who is fighting this monopoly of the morally if not financially bankrupt? To be continued.

And see, www.innercitypress.com/bb1monopoly032809.html

In DC, Obama Officials Defend Bailouts of AIG and Citigroup, Summers Speaks of Fear

Byline: Matthew Russell Lee of Inner City Press at UN
www.innercitypress.com/dc2tarp031309.html

WASHINGTON, March 13 -- The ongoing bailout of insurer AIG and its counterparties was apologized for but defended by a range of Obama administration officials this week. Treasury Secretary Timothy Geithner, until recently the president of the Federal Reserve Bank of New York and before that at the IMF, said he hated to have to bailout AIG, but "it's systemic."

His advisor Gene Sperling, a member of President Bill Clinton's economic team, said the Obama administration took office only to find AIG too big to fail, implying that this was entirely attributable to the two terms of George W. Bush. But AIG was allowed to grow without control under Bill Clinton, just as Citigroup was increasingly unsupervised under the tenure at the New York Fed of Timothy Geithner, as CitiFinancial got deeper into predatory lending (click here for Inner City Press reports on that.)

Friday in the White House Barack Obama met and then faced the Press with Paul Volcker, chairman of the Federal Reserve in the time before Bill Clinton. Volcker rarely used his regulatory powers, at least not to protect consumers from predatory lending. And yet now these are the people, along with Clinton's Treasury Secretary Larry Summers, who are defending massive transfers to Citigroup and AIG, all the while laying blame everywhere except upon themselves.

Footnote: Gene Sperling, recounting his time as an advisor to the TV show "The West Wing," said without irony that "We don't have to rely on President Bartlett anymore -- we have Barack Obama!" He said that securitization is "part of the solution." Certainly that's music to the ears of Citigroup and AIG, Goldman Sachs and Morgan Stanley. One wag wondered, concluding the week in DC, it is Gene Sperling or the Twilight Zone's Rod Sterling?

And see, www.innercitypress.com/dc2tarp031309.html

Subprime Non-Bank Lenders Ask Obama and Geithner for Bailout, in Guise of Stimulus

Byline: Matthew R. Lee of Inner City Press on Wall Street
www.innercitypress.com/tarp1afsa021009.html

NEW YORK, February 10 -- The abuse of the subprime-triggered U.S. bailout fund has reached a new high, or low, with a trade association for non-bank subprime lenders asking to be eligible for Troubled Assets Relief Program funds. In a February 5 letter to Barack Obama, copied to Timothy Geithner and Larry Summers, the American Financial Services Association argues that while "to date, the majority of the federal government's financial relief programs have been directed toward assisting depository institutions... a campaign to get credit into the hands of consumers must also encompass finance companies."

AFSA's board of directors includes, as incoming chair, a representative from the financial company World Acceptance. This South Carolina-based company has been described as "below-subprime" by SmartMoney, for example, and as making "small, expensive loans to paycheck-to-paycheck types, mostly in Southern states." Now this type of company is in line to get bailout funds, in the guise of stimulating the economy.

AFSA's letter to Obama goes on to say that "many finance companies rely on bank lines of credit to fund loans to consumers. For this reason, we ask the administration to ensure that, if these banks accept TARP money, they keep these lines of credit open and fluid."

Even prior to the predatory-lending triggered meltdown, consumer groups like Bronx-based Fair Finance Watch documented to the Federal Reserve that, for example, Bank of America, JPMorgan Chase, Citigroup and Wells Fargo were financing and enabling payday lending firms. Inner City Press sued the Federal Reserve under the Freedom of Information Act to gain access to the list of finance companies lent to by Wachovia, since failed and bought by Wells Fargo.

Now the argument is made that banks' should be required to lend to subprime finance companies as a condition of their bailout funds.

These novel arguments are merely an extension of currently accepted abuses. CIT, a finance company with a subprime component, was allowed to become a bank holding company with no public notice or comment, in order to receive bailout funds. Ocwen, a subprime mortgage servicers, has applied to the Federal Reserve to buy a small Texas bank, in order to gain access to bailout funds.

But, AFSA's argument seems to be, why even go through these contortions? Why not openly funnel bailout funds to the very subprime lenders which triggered the crisis? And perhaps Obama, Summers and Geithner will do it.

And see, www.innercitypress.com/tarp1afsa021009.html

Fed's Geithner Evaded Taxes at IMF, Used Statute of Limitations Later, Mishandled Citigroup

Byline: Matthew Russell Lee of Inner City Press at UN
www.innercitypress.com/imf1geithner011409.html

UNITED NATIONS, January 14 -- While working for the UN-affiliated International Monetary Fund earlier this decade, Treasury Secretary-nominee Timothy Geithner did not pay required taxes to the Treasury Department's Internal Revenue Service. This would seem to be problematize, to be diplomatic, Geithner's ability to gain confirmation by the U.S. Senate to oversee the IRS.

This would seem to be problematize, to be diplomatic, Geithner's ability to gain confirmation by the U.S. Senate to oversee the IRS. But Democratic Senators and Barack Obama himself are calling Geithner's an "innocent mistake" which should not impinge on confirmation. Some ask how a financial whiz, head of the Federal Reserve Bank of New York, would claim ignorance of basic tax law as a defense.

Worse, Geithner initially hid behind the statute of limitations to refuse to pay $25,000 in taxes for 2001 and 2002: "A three-year statute of limitations had precluded the [IRS] from auditing the 2001 and 2002 tax returns." But his supporters argue that Geithner's expertise is needed to confront the global financial crisis.

But what of Geithner's role, as the President of the New York Fed, in mis-regulating Citigroup, an institution which has already swallowed $45 billion in Troubled Assets Relief Program funds, and billions more in guarantees for toxic loans still on its books? Said otherwise, how can those who oversaw -- or turned a blind eye to -- the origins of the financial meltdown be presented as the only ones who can now save the day?

Also on Citigroup, sources say that the Feds are pushing Richard Parsons to take over as the embattled company's chairman. He ran Dime Savings Bank, part of the now-collapsed Washington Mutual franchise. At Citigroup's annual meetings, at Inner City Press asked questions about predatory lending from the floor of Carnegie Hall, Parsons never spoke up. What did he think of the questions, of Citigroup's venture into predatory lending with Commercial Credit, Associates First Capital and CitiFinancial? The questions should be answered.

Leaving the Federal Reserve Board is Randy Kroszner, who had served the Fed's point Governor on community and consumer issues. A new Fed advisor on these issues was recently withheld from the press without explanation by the Fed's public relations office. Fed chairman Ben Bernanke hides behind the Federal Open Markets Committee news blackout requirements in order to skip speaking to non-financial audiences, but disagrees with and ignored the requirement of public notice and comment while granting bank holding company status to Morgan Stanley, CIT, Goldman Sachs and GMAC.

A cavalier approach to the law, by both Bernanke and Geithner -- is this what would help to solve the financial crisis?

And see, www.innercitypress.com/imf1geithner011409.html