Business in Brief:Tim Geithner;Best Business Schools

The majority of businessmen have learned to give and take,according to Morgan Stanley CEO John Mack.Treasury Secretary Tim Geithner had the world on his shoulders.He'll be respected.
He did an outstanding job with the Chinese executives that visited him.I thought he was superb in the way he handled that.He didn't preach.
I think there would be a position for him on Wall Street.
AT and T will invest 14 billion dollars in broadband networks.It is also raising its dividend.Tech is the best-positioned sector under President Barack Obama,BMO Capital Markets believes.
With regard to the fiscal cliff negotiations,Professor John Cochrane of the University of Chicago Booth School of Business said the chance of another one year extension seems high to me,given how far apart we are in the basics.It needs real political leadership.That's roughly what happened in the 1980s.
Let's hope they can do it,lowering tax rates while eliminating deductions.That is tremendously pro-growth.The whole trick is to get this chaos out of our tax code.To focus on starting a business rather than consulting a tax lawyer-that would be pro-growth.
The Booth School of Business is rated the best this year by Businessweek magazine.Harvard Business School came in second,while the University of Pennsylvania Wharton School of Business got third.
Morgan Stanley(MS),AT and T(T)

Asia This Day:Fiscal Cliff Troubles Australia;Tokyo Nuclear Protest

Tens of thousands clogged Tokyo Monday as they protested Japan's restarting of reactors in the wake of 2011's tsunami and nuclear disaster.Two of the country's fifty reactors are back on line at the Ohi plant.
Japan's GDP came in lower than expected at -3.5 versus the -3.4 estimate,on falling exports to a slowing China and Chinese protests against Japan's territorial claims.Consumer spending has also dropped,further shrinking the Japanese economy.The Nikkei was down 61.04 after the lunch break Monday.
The MSCI Asia Pacific index fell 0.30% in early Monday trading,while India's Nifty Fifty and Sensex indexes rose about 0.20%.A big wireless spectrum auction is being conducted by the Indian government.
Toyota  Motors will be doubling its capacity in Indonesia,building a new engine plant there.
Australian treasurer Wayne Swan has been warning about the results of the fiscal cliff,a combination of  US tax increases and spending cuts of some 800 billion dollars that will apply on January 1.Without action by Congress,there would be a severe blow to the fragile global economy.The world can't afford the continuation of this gridlock in Washington.Mr.Swan has met with US Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke to express his concern.
Gold is at a near three-week high on the fiscal cliff worry.
China's trade surplus came in at 32 billion dollars in October,a rise of 11.6%.Copper imports were down to their lowest level in 15 months,dropping 18%.Australian mining shares have declined because of the Chinese slowdown.

Geithner At NYU:Comeback Confidence

Treasury Secretary Timothy Geithner expressed confidence in the nation's future at NYU's Stern School of Business recently.Mr.Geithner feels that America is coming back;the economy is healing.Typically,recoveries following a crisis are more moderate.You always face more headwinds.Businesses are starting to hire,but the U.S. needs to bring the fiscal deficit down.Economic growth needs confidence that the U.S. will cut debt.This debt reduction will be a difficult process.
We're seeing more stability in house prices,but we still have a lot to work through.The system we have today is not tenable for the future.Fannie Mae and Freddie Mac built up huge portfolios of mortgage-backed securities without the capital to back up the risk.
The government still has substantial capacity to respond to a future crisis,Mr.Geithner said,wearing a black suit,blue shirt and blue tie.He did not believe the U.S. is headed for Japanese-style deflation.Most countries wait too long to respond to crises.The President made it clear we were not gonna do that.We decided to act with force.The major firms are in a much stronger position because we forced them to disclose and raise more capital.Because of that,the world turned and the basic beginnings of recovery began.Mr.Geithner is very confident we're gonna avoid the Japanese fate.

Early Edition:Geithner Sees Better Times

Treasury Secretary Timothy Geithner took a message of optimism to the weekend's G-20 meeting of finance ministers and central bankers in Busan,South Korea.Mr.Geithner says the Europeans have the ability and the political will to solve the debt problem.We're in a much stronger position today to get through this.He thinks we have in place a moderate but pretty strong recovery to deal with this.
These new rules on capital and liquidity are gonna be the most important elements of reform around the world,Mr.Geithner believes.We want these financial firms to run much more conservatively,yet support businesses.We want to bring the world to higher standards and a level playing field.U.S. firms have much stronger capital positions today.The economy has been growing now for four quarters.All the indicators suggest improving job growth.The broad numbers show steady strong improvement and confidence that will translate to better times for the average American,in Timothy Geithner's opinion.
Mr.Geithner called for other countries to re-balance growth in order to create sustainable growth.The U.S. is moving aggressively to fix things we got wrong and to strengthen our economic fundamentals.Americans are strengthening their savings,so other countries must generate more internal consumption to take up the slack.
Mr.Geithner was warmly greeted by Jean-Claude Trichet,President of the European Central Bank,at the international conclave in Busan,South Korea.

Geithner Exercises His Authority

Treasury Secretary Timothy Geithner invoked his statutory authority last week in a letter to the U.S. Congress.Mr.Geithner notified Capitol Hill that he has extended the Troubled Asset Relief Program,or TARP,until October 3,2010.He does not expect to deploy more than 550 of the 700 billion dollar war chest,and is looking for up to 175 billion in repayments by the end of 2010.Reduced commitments will allow significant resources to pay down the national debt.
Mr.Geithner said the extension will allow continued implementation of housing and small business support programs.He anticipates recovering all but 42 billion of the 364 billion in TARP funds deployed this year.Several banks,such as Bank of America and Goldman Sachs,have already repaid their TARP allotments.Citigroup is planning the repayment of its 20 billion dollar loan from TARP.At 9%,Citi's Tier One capital ratio is the highest in the industry,indicating its ability to repay the debt,in the company's opinion.Citi will sell 17 billion in common shares,plus 3.5 billion in tangible equity units.By 2010,Citi will emerge from the pay restriction regime.

Small Business,Big Problem

Parts of the financial system are still very damaged,Treasury Secretary Timothy Geithner says.Access to credit for small business is still very constrained.We need to keep getting capital to banks and the Small Business Administration for small businesses.A recovery that's gonna work requires that it be led by private demand,if it's gonna be sustainable.We're not gonna make the mistake of putting on the brakes too early.If you look at the cost of credit,there's been a really dramatic improvement in the system as a whole.Generally the system today is in a much better position to provide the credit the country needs.
Private capital is more valuable than public capital,Mr.Geithner emphasized.The financial markets are open for capital,as they have been since spring.Regulatory reform must provide 1.much stronger protection for consumers and investors,and 2.a less fragile system,where the government can take action without putting the people at risk.
Getting growth on track led by the private sector is our number one priority,Mr.Geithner asserted.The big source of uncertainty now is how strong private demand is gonna be.Uncertainty is bad for business.When health care reform is settled,the certainty will be a very good thing for businesses across this country,Secretary Geithner believes.His speech becomes slurred at times as his mind races ahead of his tongue.He repeatedly returns to the importance of the private sector and small business.

Focus on Regulatory Reform:The Financial Future

A lot of concern centers on the proposed granting of powers to the Federal Reserve for the monitoring and control of systemic risk.The Fed would have to get Treasury Department approval for spending large amounts of money during crises.At such a time,although Treasury is involved,it is very important that the Federal Reserve preserve its independence and accountability for price stability and stable growth,Treasury Secretary Timothy Geithner told the Senate Banking Committee last week.Central banks around the world have traditionally policed systemic risk.Proposed changes to the Fed's role are modest.The Fed chairman would still be accountable to Congress.Our solutions focus on the central causes of the financial crisis.Conservative constraints on risk-taking will mitigate the too big to fail hazard.There is no conflict between the Fed conducting monetary policy and policing systemic risks,Mr.Geithner said.
A lot of things contributed to this crisis,Mr.Geithner explained.Future crises will require a study of how macroeconomic policy contributed to them.We need to be realistic in recognizing how difficult it will be to anticipate future risks.The critical failure of policy was in not imposing constriction on leverage in the good times.The Fed has a better feel for financial markets than any other government entity.
We're still in the midst of a challenging recession on a global scale,and we want to be able to respond to future risks,so Treasury should retain any money repaid to it by financial institutions,Mr.Geithner asserted at the Senate hearing,wearing a charcoal suit,white shirt and burgundy tie.He seems to be gaining the respect even of Republicans who doubted his suitability for his position.The gravity of the reform process was clearly evident in the atmosphere of the hearing.You could feel the weight of the occasion on everyone's shoulders.Would the Federal Reserve lose its independence under the reforms,or would the Fed be too powerful? No one wants to disturb the delicate balance of the financial regulatory bodies,but the wheels of government are rolling down this path of reform,and there doesn't seem there is any chance of stopping them.

The End or Beginning

The cost of credit has started to ease,Mr.Geithner informed the U.S. Senate.Businesses are finding it easier to raise money in the capital markets.This is all welcome news,but I want to emphasize this is just the beginning.We still face a prolonged repair and adjustment.The combined effect of the programs will help.We're working very closely with the Small Business Administration.Refinancing of commercial real estate is a major challenge.The best thing we can do is 1.provide capital where it is necessary;and 2.have the Federal Reserve extend lending to Commercial Mortgage-Backed Securities,or CMBS.These are two very important steps to take.
About half the AIG risk has been taken down.To be fair,the management of this firm is finding it incredibly difficult to disentangle the businesses.Our options were substantially constrained by the complexities of this firm,Tim Geithner pointed out.Wearing a charcoal suit,white shirt and blue striped tie,the Treasury Secretary maintained his composure and seriousness through the intense exchanges with the demanding senators.

How Things Have Changed

Concern about systemic risk has started to diminish,Mr.Geithner told the Senate Banking Committee,and there are signs that credit conditions have improved,but we still have a long way to go.The economy is still shrinking;the system is still damaged.We're gonna do no more than what it takes to fix the system.Leverage has declined;banks are funding themselves more conservatively.The vast majority of banks have more than enough to be well-capitalized.Restoring lending in the commercial real estate market is critical.Treasury will pick fund managers for the Public-Private Investment Partnership,or PPIP,in the next several weeks.Treasury still has 123.7 billion in Troubled Asset Recovery Program,or TARP, funds available.

Geithner Briefs Senate Panel

Treasury Secretary Tim Geithner has been briefing the Senate Banking Committee on the current situation.We are looking at ways to get more capital into community banks,he said.Unless we are prepared to contemplate the risk to the system of default by AIG,we have no choice but to fund it.I believe what Congress did at that point was absolutely essential.The bleeding has slowed substantially from the height of the financial crisis.It will take longer than a year for the government to exit AIG.
Demand for credit is falling as businesses repair their balance sheets,Mr.Geithner observed.The expansion of the Targeted Asset-backed securities Loan Facility,or TALF,to a wider range of securities will help repair capital markets.The government has unwound about half its risk from AIG financial products.The demand for credit is greater than what looks like the available supply.We have somewhat north of 100 billion of capital to get credit flowing again.We've got a pretty effective series of programs in place,but they're just getting started,and we have to keep at it,Mr.Geithner admitted.

Progress at Horsham

The G-20 fiance ministers and central bankers achieved basic agreement at their weekend conference at Horsham,near London.U.S. Treasury Secretary Timothy Geithner said we are seeing the world move together at a speed and on a scale without precedent in modern times.We have a strong consensus on the need for both recovery and reform so that we never face a crisis like this again.The ministers agreed on the need for both economic stimulus,according to the needs and abilities of individual countries,and regulatory reform,which has an international aspect.British Chancellor of the Exchequer Alistair Darling felt there had been a significant amount of progress,a great deal of consensus.Mr.Darling,however,expressed deep concern about emerging markets and their 90 million people who could be impoverished by the financial crisis.

The Bitter Critics

In contrast to his G-8 peers,Mr.Geithner has been subjected to bitter criticism by commentators at home.Among remarks made about Mr.Geithner were that he isn't worthy of respect and that he was hiding out in Rome.The critics are dissatisfied with his deliberate,consultative style.Several of them have expressed anti-European sentiments in the past,while Mr.Geithner is intent on fostering international cooperation.His few weeks in office have disappointed a Wall Street crazed by the disastrous results of its own misbehavior and ignorance.As well,Mr.Geithner takes an intellectual approach to the crisis that is culturally at odds with the vociferous impatience of day traders and television personalities.What's important now is you have around the world a much greater sense of urgency and commitment,Mr.Geithner said in Rome.We all recognize that the power of what we do individually will be much more effective if we move together,the new Treasury Secretary related.

Ministers React to Geithner

The G-8 finance ministers seemed to appreciate U.S. Treasury Secretary Timothy Geithner's presentation in Rome.Alistair Darling,the British Chancellor of the Exchequer,said it was quite clear the new American administration is getting into its stride.It wants to make a difference,not just for Americans,but for the world.The G-8 ministers described Mr.Geithner as helpful in explaining President Obama's plans,especially the integration of the various initiatives and the operation of the public-private fund for troubled assets.

World Finance Ministers Meet

The G-8 finance ministers,which include the U.S.,U.K.,Germany,Italy,Spain,Russia,Japan and Canada,met over the weekend in Rome to discuss the financial crisis.It was an opportunity for the ministers to speak with Timothy Geithner,the new U.S. Treasury Secretary,and hear the Obama administration's plans for dealing with the crisis.The G-8 focused on what to do about the troubled assets held by many large banks,that are causing the low confidence at the root of the crisis.Mr.Geithner suggeted a new public-private fund to insure some banks from further losses caused by troubled assets.Other banks could be relieved by a direct purchase of the assets by the new fund.The new rescue fund,together with an exisiting rescue fund,could add up to more than two trillion dollars.The rescue funds are in addition to the 787 billion dollar economic stimulus package to be signed into law by President Obama today in Colorado.The response must be massive,Mr.Geithner said,because the crisis itself is massive.The response must be deep and broad enough to last as long as the severe recession does.

Who Is Mary Schapiro?

If Timothy Geithner,the Treasury Secretary-designate, is Mr.Experience,Mary Schapiro,whom President-elect Obama has chosen to head the Securities and Exchange Commission,the financial industry regulator,is Ms.Experience.Appointed by President Ronald Reagan,she served on the commission for six years,rising to the post of Acting Chairman before President Bill Clinton named her to the top job at the Commodity Futures Trading Commission.Currently,she leads the Financial Industry Regulatory Authority,or FINRA,a self-policing organization for the industry.She has worked for them since 1996.

Major Institutions Now Secure

Citigroup has a relatively new management team that has had a lot thrown on its plate to deal with,and is dealing with it well,Hank Paulson remarked.We are not expecting another major financial institution to fail.We have what we need to manage the financial crisis.We're doing everything we know how to work with the transition team.The President-elect made a great decision on Tim Geithner.I take great comfort that this is someone who's got great judgement and knowledge which is there,Mr.Paulson said of the Treasury Secretary-designate,with whom he has worked closely throughout the financial crisis.

What Geithner Is Like

Tim looks at you and is very frank,telling you what a policy can and cannot do,Mr.El-Erian revealed.He has the self-confidence that comes from years of experience.There is no alternative for government involvement;Mr Geithner understands it has to be targeted and reversible,and that's a good thing,Mr.El-Erian observed.Susie Gharib,co-anchor of Nightly Business Report,has served with Mr.Geithner on the board of trustees of the Economic Club of New York.She describes him as very smart,thoughtful and humble.He is very diplomatic,she said.Mr.Geithner,who is the married father of two,is Mr.Experience.He has served under three presidents and five Treasury Secretaries,holding posts in the Federal Deposit Insurance Corporation,the Federal Reserve and the Treasury Department,where he was Assistant Secretary for International Affairs.He is currently President of the Federal Reserve Bank of New York,helping to resolve the Bear Stearns,American International Group and Citigroup issues.

Who Is Timothy Geithner ?

Mohamed El-Erian,co-CEO and co-Chief Investment Officer of PIMCO,says he met Timothy Geithner,President-elect Obama's Treasury Secretary-designate,in the midst of the Russian and Asian crisis.He is very cool,Mr.El-Erian said.He has the crisis management experience that you need at this point.Hank Paulson,the current Treasury Secretary,and Mr.Geithner have worked together.The more certainty we can get,the more the healing process can go forward in a good manner,Mr.El-Erian thinks.

A Worried World

Last week was an emotional one in the financial world,and that emotion spilled over into the general public.Federal Reserve Chairman Ben Bernanke's face was ashen and etched with cares.He had never looked so concerned.The U.S. central banker looked as though he bore the world on his shoulders.Indeed,he and his colleagues at the Treasury department and Securities and Exchange Commission did.The President of the Federal Reserve Bank of New York,Timothy Geithner,has worked very hard behind the scenes.President Bush has stayed informed and made statements,but delegated details to experts such as Mr.Geithner.More than a few eyes misted over last week,touched by the huge events they were witnessing.Art Cashin of UBS,who works at the New York Stock Exchange,said there was a sense of general fear in the air.We've never seen a series of institutions disappear rapidly;there were isolated instances in the past.This has been a great place,and I feel badly for those laid off and their families-and I miss many of them.We may be morphing into a whole new financial world.The world I knew is changing,and I doubt if it will ever come exactly back,the distinguished Wall Street veteran lamented.