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Home  » Business » Do away with Geithner, Bernanke: Forbes to Obama

Do away with Geithner, Bernanke: Forbes to Obama

Source: PTI
Last updated on: March 20, 2009 17:19 IST
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Taking a cue from his hero Abaraham Lincoln, US President Barack Obama should discharge his economic commanders -- Treasury head Timothy Geithner, Fed chairman Ben Bernanke and SEC chief Mary Schapiro -- for not being up to the task, media moghul Steve Forbes has said.

"President Obama should take a cue from his hero, Abraham Lincoln. During the Civil War Lincoln never hesitated to fire generals he thought weren't up to the task. Obama should do the same thing with his economic commanders," business magazine Forbes' Editor-in-Chief said in an opinion piece in the publication's issue.

"Clearly Treasury Chief Timothy Geithner has been about as effective in fighting the credit crisis as George McClellan or Joe Hooker were in fighting Robert E Lee's Army of Northern Virginia," he noted.

Geithner has come for sharp criticism over controversial payment of $165 million in bonuses by troubled insurer AIG after getting bailout money from the government.

Forbes said that Geithner has been in the midst of this crisis since it erupted in the summer of 2007, but rather than being ready for decisive and bold action soon after Obama assuming the office, he "has discouraged markets with his vague generalities." 

"Another high-ranking officer who should be reprimanded is the new SEC chairman, Mary Schapiro. Why hasn't she assertively sought the reimposition of the uptick rule concerning short-selling? And why hasn't she vigorously enforced the prohibition of naked short-selling?" Forbes asked.

"... after all, short-sellers, including exchange-traded funds, are supposed to borrow the shares before they sell them," he added.

"Another figure who should suffer a Lincoln-like termination is Federal Reserve Chairman Ben Bernanke. This seemingly quiet, unassuming man has made just about every mistake possible in both creating and dealing with the crisis," Forbes wrote.

"His latest blunder is astonishing: Contrary to impression, the Fed has been tightening, shrinking its balance sheet by nearly $400 billion since December. In the face of the most severe banking/insurance crisis since the 1930s, the squeeze absolutely defies belief.

"This would be like a fire department deciding to roll up some of its hoses when a big house is a flaming inferno. Bernanke says he fears future inflation, but that's like those firefighters being afraid to cause water damage to the furniture," Forbes wrote.

"Right now we're in a bone-crunching deflation. Bernanke's actions recall those of the Fed during the early years of the Depression, when our central bank wouldn't ease in the face of a catastrophic contraction for fear of igniting a German-style inflation," Forbes said.

Forbes wrote further that "Larry Summers, head of the National Economic Council, is supposedly tutoring the President each morning. If so, either the President is a slow learner or professor Summers a particularly poor teacher."

"Obama should do what Lincoln did when he sensed that he wasn't getting war-winning advice from his generals and his military advisers -- get books on economics and start learning more about the subject from new sources," he added.

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