Treasury Secretary Timothy Geithner to Address The Commonwealth Club in San Francisco September 30

With the country working hard to pull out of one of the most difficult economic climates in the past century, the Obama administration's powerhouse economic team is the focus of much hope and much criticism. Are they taking the right measures? What's really happening with the economy? Just how close did the United States' economy come to going off a cliff two years ago?

On September 30, The Commonwealth Club of California is hosting a program featuring U.S. Treasury Secretary Timothy Geithner. The event will take place at the Mark Hopkins Hotel in San Francisco.

This is your chance to hear for yourself what the nation's top financial policymaker has to say about the current and future state of the economy.

Tickets are available for advance purchase.

UPDATE: This program was postponed. We'll keep you informed about any rescheduling.

Populist Anger Continues to Rise

Jon Stewart is a comedian, not a media critic, but he voiced America's frustration with the financial system last week when he sparred with CNBC's Jim Cramer. Robert Reich is an economist who better summed up the essence of Stewart's populist rant in a word: "helpless."

Writing in Salon.com today, the former Clinton administration cabinet secretary is a frequent speaker at the Commonwealth Club of California. Reich spoke at the Club in January, saying that the federal stimulus bill needed to be much larger than the legislation that ultimately passed ($787 billion over two years). On his blog, Reich recommends that the Obama administration quickly draft another stimulus bill of roughly the same size.

He also believes the populist streak that is becoming more fervent across the nation as instances of financial impropriety increase is hindering the confidence of the American people and rendering them helpless.

If our very own Secretary of the Treasury [Timothy Geithner] doesn't even learn of the bonuses until months after AIG has decided to pay them, and cannot make stick his decision that they should not be paid, AIG is not even accountable to the government. That means AIG's executives -- using $170 billion of our money, so far -- are accountable to no one.

The possibility of this firestorm of populism possibly engulfing the Democratic-led Congress and White House may be the impetus for a story in today's New York Times in which top White House officials fear the backlash could make future bailouts more difficult to push through Congress.

Reich also makes an interesting point regarding AIG's financial priorities if it were forced into bankruptcy last fall, instead of being propped up by the government.

Had AIG gone into Chapter 11 bankruptcy or been liquidated, as it would have without government aid, no bonuses would ever be paid (they would have had a lower priority under bankruptcy law than AIG's debts to other creditors); indeed, AIG's executives would have long ago been on the street. And any mention of the word "talent" in the same sentence as "AIG" or "credit default swaps" would be laughable if laughing weren't already so expensive.

In the meantime, Geithner and economic adviser Larry Summers, among others in the administration, continue to say there is little the government can do to stop AIG employees from keeping their portion of the $165 million pie. And New York Attorney General Andrew Cuomo wants the names and job performance records of every AIG employee receiving the infamous bonuses. Whether such efforts at instilling confidence in the accountability of recipients of the bailouts works or not will likely play a big role in forming future attitudes of American citizens toward government response to the economic crisis.

--Steven Tavares

Administration: Nationalization of Banks is not Happening

The Citibank web site has its famous marketing slogan atop its home page, "Citi never sleeps." The motto means customer's can do their banking anytime, but with nationalization of banks becoming more likely by the day, it could be an admission of many sleepless night to come.

The past week has seen more than a whisper campaign from some Democrats and few leading economists that the short-term remedy for the banking system is nationalization. Sen. Chris Dodd has said it may "unavoidable", which is nearly equivalent to saying, "Folks, get ready. It's happening." It's no wonder the stock market is beginning to reflect concern about what a collapse of Citibank, Bank of America or Wells Fargo could mean to the economy, and the Obama administration may be slowly setting the stage for nationalization. For the time being, though, President Obama and Fed Chairman Ben Bernanke say nationalization is not on the radar. Bernanke's comments stoked Wall Street, and that may have been his intent, while Treasury Secretary Timothy Geithner told Jim Lehrer, “I think that’s the wrong strategy for the country and I don’t think it’s the necessary strategy.”

The Washington Post reported that the Obama administration tweaked the terms of government assistance by demanding common stock in lieu of cash. "The change paves a road toward nationalization for the most troubled large banks," according to the Post. A piece on Bloomberg.com goes further in calling nationalization inevitable.

Nationalizing the nation's top banks has its critics, of course. With taxpayers already shouldering a large burden of risk that is likely to increase in the future, backing the financial sector may be too much. Some economists even believe another stimulus bill of nearly the same sticker price will be needed within two years. 

James S. Turley, Chairman and CEO of Ernst & Young told The Commonwealth Club of California earlier this month that state ownership is a bad idea over the long haul:

The thing I hope doesn't happen is government officials get too comfortable with state ownership in the various industries they are investing in. And I hope they don't see this as the long-term solution.... Let me be clear, I think it was important that the government stepped in during these unprecedented times, but it is not a good idea and no thinks that governments over the long-term allocated capital as efficiently or effectively as free markets.

On the other hand, many commentators say that taxpayers saw little in return in the form of consumer lending after the initial $350 billion bailout money passed late last year, and news reports of lavish executive spending and multi-million dollar bonuses left a lingering distrust toward the banks.

How poor is the health of the nation's biggest financial institutions? The grand sage of the credit mess, New York University Professor Nouriel Roubini laid it out in this week's issue of Time, saying Citibank is "on the way to ICU," Bank of America should "prepare the transfusion" and surprisingly, Wells Fargo needs a "Defibrillator. Stat!"

Just 16 months ago, Bank of America and Citigroup were quarterly flipping top positions for the title of world's largest bank. Today, they may be on the verge of being owned by the biggest economy in the world.