Wild Coincidence: Fed Begins Printing Currency Bearing Timothy Geithner's Signature, Ends Up With $100B in Monopoly Money

But unlike the real worthless money the fed has been printing lately, these bills will be quarantined.

A printing problem with the new high-tech $100 bills has forced government printers to shut down production - and to quarantine more than one billion of the notes.

The flawed notes represent more than ten per cent of the U.S. currency on the entire planet.

They are being stored in giant vaults at Fort Worth in Texas and in Washington, DC, as the Federal Reserve desperately tries to resolve the problem.

Meanwhile printers have begun reprinting the old $100 notes - without the high-tech security features and still bearing the signature of George W Bush's treasury secretary, Hank Paulson - in order to prevent a cash flow crisis.

With the holiday shopping season in full swing, authorities are scrambling to do everything they can to keep U.S. cash flowing.

'There is something drastically wrong here,' one source told CNBC. 'The frustration level is off the charts.'

The new high-tech bills were initially scheduled for release in February of 2011. They were due to be the first in circulation that bore the signature of President Obama's treasury secretary, Timothy Geithner.

Cross-posted.

Fed To Geithner: Go Pound Sand

Aww, poor Timmy the tax cheat.

The Federal Reserve Board has rejected a request by U.S. Treasury Secretary Timothy Geithner for a public review of the central bank’s structure and governance, three people familiar with the matter said.

The Obama administration proposed on June 17 a financial- regulatory overhaul including a “comprehensive review” of the Fed’s “ability to accomplish its existing and proposed functions” and the role of its regional banks. The Fed was to lead the study and enlist the Treasury and “a wide range of external experts.”

Some top central bank officials, after agreeing to the review, saw a potential threat to Fed independence after the Treasury released the proposal, two of the people said. The Obama plan said the Treasury would consider recommendations from the review and “propose any changes to the Fed’s governance and structure.”

“It is not obvious at all why that is a Treasury responsibility or even appropriate why the Treasury would undertake that kind of study,” said Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Vineland, New Jersey, and a former Atlanta Fed research director. “The Fed was created by Congress and it is not part of the executive branch.”

The Treasury has no business sticking their nose in the Fed's business. And the executive branch needs to mind their own business and stay away from monetary policy and the Fed. I would be just as adamant if the shoe were on the other foot and the Fed was trying to tell the Treasury what to do.

Believe me, folks, the last thing you want is for the politicians to be able to directly influence monetary policy, regardless of which party is in charge.

A Blind Hog and a Turnip

An old boss of mine used to talk about how even a blind hog could find a turnip once in awhile. I think this is an apt comparison to the latest coming out of the Treasury. I think they finally got something right:

The vast majority of complex and opaque over-the-counter derivatives must be traded on centralized clearinghouses, the Treasury Department recommended on Wednesday as part of its regulatory reform effort for exotic financial products.

"As part of our comprehensive reform effort, we are laying out a framework for oversight for the derivatives markets," Treasury Secretary Timothy Geithner said.

I've pounded Geithner for months but on this I think he's correct. Derivatives create an layer of risk and complication to the market that is very difficult for the average investor to understand or price into their investment decisions.

The Treasury, the Securities and Exchange Commission and the Commodity Futures Trading Commission proposed having standardized credit default swaps and most derivatives traded through clearinghouses. The government regulators made a host of other recommendations, however legislation would need to be crafted by Congress for the Treasury proposal to become a reality.

Traders could also be required to keep capital in reserves to cover losses. Specifically, the proposal also calls for derivatives dealers to maintain conservative capital standards, tougher risk controls and proposes new business conduct guidelines.

The parts I like are the trading desk, which will give transparency to the pricing of these securities and the requirement to keep capital in reserve to cover losses. Both of those would have gone a long way to preventing the melt down we saw happen last fall.

I'll hammer Geithner will glee every time he screws up, and I still think he's a clown, but this time he got it right.

Geithner Imposing New Mortgage Requirements on Banks

Word is starting to get out about the new Bank plan concocted by tax cheat Tim Geithner.

Treasury Secretary Timothy Geithner told Democratic lawmakers that banks getting U.S. aid will be required to modify mortgages to help borrowers avoid foreclosure, according to a person at a briefing.

Geithner said other requirements will be imposed on banks under the Obama administration’s plan to capitalize the financial system, the person said. Geithner, who is scheduled to unveil his plan Feb. 9, spoke today in Williamsburg, Virginia, where House Democrats met for a retreat.

A requirement to modify mortgages would be a departure from the approach of Geithner’s predecessor, Henry Paulson, who rejected policies requiring the industry to modify loans for troubled borrowers. Paulson helped to launch a voluntary effort called the Hope Now Alliance to reach borrowers at risk of foreclosure and help them change their loan terms.

Democrats in Congress faulted Paulson for spending $350 billion from the $700 billion Troubled Asset Relief Program without setting requirements for use of the money. Lawmakers have urged President Barack Obama to set limits on how banks spend the fresh U.S. capital, and require stepped up lending and foreclosure relief.

I thought Geithner was supposed to be some kind of a hot shot financial wizard? Other than cheating on his taxes and getting away with it, I don't see much there.

This plan still does not address the toxic securities themselves and that is the key to the matter. It just hands more money to the banks to sit on and keep them afloat, but it does not remove the cancer form the system.

As long as "mark to market" still is in effect, banks are staring at the prospect of making a good loan to a solid borrower who pays the debt service on time, and still have to write down part of the loan due to dropping short term market values. This is absolutely insane, and the banks will continue to still back and hoard cash until that situation changes. In the mean time, real estate values will continue to fall because of that reality.

The Treasury needs to have the SEC and FASB void "mark to market" as a valuation model, which will cut the problem in half immediately and put a floor on the market. Then they need to create a Resolution Trust #2, get the toxic assets off the banks books and work out the loans long term. I bet 90% of these loans end up being good in the long run anyway.

Michael Moore Under Investigation

No, it's not the diet police after the porcine propagandist. It's the U.S. Treasury Department.

The Treasury Department's Office of Foreign Assets Control notified Moore in a letter dated May 2 that it was conducting a civil investigation for possible violations of the U.S. trade embargo restricting travel to Cuba. A copy of the letter was obtained Tuesday by the AP.

"This office has no record that a specific license was issued authorizing you to engage in travel-related transactions involving Cuba," Dale Thompson, OFAC chief of general investigations and field operations, wrote in the letter to Moore.

In February, Moore took about 10 ailing workers from the Ground Zero rescue effort in Manhattan for treatment in Cuba, said a person working with the filmmaker on the release of "Sicko." The person requested anonymity because Moore's attorneys had not yet determined how to respond.

Moore, who scolded Bush over the Iraq war during the 2003 Oscar telecast, received the letter Monday, the person said. "Sicko" premieres May 19 at the Cannes Film Festival and debuts in U.S. theaters June 29.

Moore declined to comment, said spokeswoman Lisa Cohen.

After receiving the letter, Moore arranged to place a copy of the film in a "safe house" outside the country to protect it from government interference, said the person working on the release of the film.

Treasury officials declined to answer questions about the letter. "We don't comment on enforcement actions," said department spokeswoman Molly Millerwise.

The letter noted that Moore applied Oct. 12, 2006, for permission to go to Cuba "but no determination had been made by OFAC." Moore sought permission to travel there under a provision for full-time journalists, the letter said.

No doubt all his sycophants will rally around this slob.

Previously: Moore Exploiting 9/11 Again

UPDATE: Others commenting include Weasel Zippers, Michelle Malkin, Jawa Report, Sweetness & Light, Blogmeister USA.