Geithner’s Gangster Government?

Here and there I’ve noodled over the prospect that the U.S. might turn into Argentina. I did not mean it as a policy recommendation.

Geithner Testifies At House Hearing On International Financial SystemComes news that in 2011, then-Secretary Timothy Geithner called Harold McGraw III, Chairman of Standard & Poor’s Ratings Services’ parent company, to warn him that the firm would be held “accountable” for its downgrade of U.S. debt (prompted by the melee over the debt ceiling). “S&P’s conduct would be looked at very carefully,” Geithner told McGraw according to the filing. “Such behavior would not occur, he said, without a response from the government.” The “filing” is a sworn affidavit submitted by Mr. McGraw in the federal government’s $5 billion fraud case against S&P over alleged conflicts of interests and misrepresentations in the rating of mortgages and related instruments. S&P has consistently maintained that the lawsuit was filed in retaliation for its ratings decision. Mr. McGraw is either (1) a desperate perjurer; (2) suicidal; (3) both; or (4) telling the truth.

MorenoIn Argentina, folks who report economic data (for example, on inflation) lose their jobs, are fined to the tune of $250,000, and may go to jail. Nothing subtle about it:

[Guillermo] Moreno, Argentina’s pugnacious internal trade secretary, is reported to have told a key banker […]: “You’ve got 72 hours to get the parallel (dollar rate) to 4.50 pesos. Tell everyone what I want.”…

His methodology is intimidation – he has been rumored in the past to carry a gun and he took boxing gloves to a meeting of shareholders of a key newsprint company in which the state has a stake in a bid to show who was boss. And he has slapped private economists with fines for estimating inflation data way above official statistics. He has been described as Argentina’s de facto economy minister and many businessmen prefer silence to crossing with him – perhaps remembering Martín Lousteau, a former economy minister, who defied him over farm export tariffs. Moreno was seen at an event running his fingers across his throat, indicating Lousteau was playing a fatal game …

For all its morbid charm, that form of financial repression could never happen here. The federal case against S&P is civil, not criminal. The administration supports comprehensive firearms controls. Its minions are lawyers, not gangsters.

Some will rob you with a six-gun, and some with a fountain pen.

Michael S. Greve

Michael S. Greve is a professor at George Mason University School of Law. From 2000 to August, 2012, Professor Greve was the John G. Searle Scholar at the American Enterprise Institute, where he remains a visiting scholar. His most recent book is The Upside-Down Constitution (Harvard University Press, 2012).

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  1. Jeremy Klein says

    As wise and scary as your article is, I’ll quibble at one point: it’s surprisingly naive to think “that form of financial repression could never happen here.” Repression is a part of human nature. As we continue to allow the erosion of the protection of our rights, and the limitations on the powers of gov’t, that the Constitution was intended to provide, we may someday find ourselves facing equally objectionable thuggery here.

  2. JD says

    I have always hoped that S&P would sue Treas. for civil rights violations on grounds of threatening unlawful prior restraint in violation of the First Amendment when this happened.

  3. Walter Sobchak says

    “The administration supports comprehensive firearms controls. Its minions are lawyers, not gangsters.”

    How can I tell the difference?

    Why would I prefer lawyers over gangsters?

    • gabe says


      The way to tell the difference is this:

      Lawyers will overcharge you. Gangsters are willing to settle for the “vig” or “juice” as opposed to full payment.

  4. Bob says

    Financial repression? How about FATCA’s devastating influence on normal US citizens working abroad. Ever try to rent an apartment without a local bank account? Ever try to get a local bank account without a local residence? Ever try to transfer enough funds overseas to buy a home? If you’ve donated to Republicans and are moving that amount of money, the IRS is going to be knocking on your door and the funds are likely to be delayed.

  5. JoyO says

    This is similar to scenarios that in the past would only occur in Russia. I’m very concerned that the new USA is becoming the old Russia under the “Fundamental transformation of America” blanket.

  6. gs says

    Moody’s, which like S&P was up to its nose in the mortgage disaster, is not getting sued by the government. Maybe it’s coincidental that Moody’s has not downgraded the USA’s AAA credit rating. Maybe it’s a coincidence that Obama ally Warren Buffett is a major Moody’s shareholder.

    Looking for crony capitalism? Move along, nothing to see here…

  7. Ron Nord says

    When the “Godfather” realized that Sonny had seen him kill it sealed his fate. “I always wanted something better for you, I wanted you to become a Doctor or Lawyer” the Godfather said. “You can steal much more with a briefcase than you can with a gun”.

    From the movie, “The Godfather”.

  8. Pettifogger says

    We have to decide who to believe. Part of that decision is deciding who has more credibility. In my book, the government has none in matters such as this.

    As to means of stealing, I recall from my childhood when my father observed that more money had been stolen with a pencil than with a gun. At the time, I did not understand him, but he was correct.

  9. Mike says

    “The administration supports comprehensive firearms controls. Its minions are lawyers, not gangsters.” I beg to differ. They support comprehensive firearms controls for you and I, definitely not for their minions. Their gangsters may have whatever firearms they please. After all, they can’t be gangsters if they don’t outgun the victims.

  10. David Pittelli says

    “The administration supports comprehensive firearms controls. ”

    That does not mean that the Administration wants no one to threaten people with guns. That means that the Administration wants to have a monopoly on such threats.


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