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FBN’s Charlie Gasparino on Treasury Secretary Tim Geithner’s behind-the-scenes response to the debt crisis continuing in Europe.
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Their banking system.
But what's going on behind the scenes to push European leaders to take those steps -- has exclusive details on what Wall Street is telling Treasury Secretary Tim Geithner.
And what Geithner then is telling the eurozone leaders right I mean.
-- subways -- for -- the president speaks everybody listens Oxley but but it kind of under pleased to sort of what's going on behind the scenes the amount of activity behind the scenes led by.
Treasury Secretary Tim Geithner as to how to deal with the eurozone problem for crisis what we have is correct Geithner speaking with Wall Street executives its interest in.
Whenever they come through whenever there's problems you know Geithner reaches out to the people exposed to reach out to guys -- run big banks.
Obviously someone like Larry Fink at about BlackRock big money management firm would be involved in these discussions so -- -- probably Jamie Dimon and a and and about.
Probably about a half a dozen to a half dozen to a dozen other people.
That you know Treasury Secretary Geithner talked to about how to approach -- and here's what they're talking about those folks -- telling me this that.
He is pushing the -- essentially Geithner now is pushing with the European leaders.
The Geithner playbook exactly how he and when he was to fed president New York fed president.
And Treasury Secretary -- secretary Hank Paulson.
Basically try to solve and the US banking problem he's pushing that template in New York what does that template income involved some real stuff that you -- to be the president talk about.
Infusing the banks with a lot of capital what else -- and what what else but it is part of this thing.
Well there's some other things the president mentioned deposit insurance and their big on this notion of deposit insurance why is that I don't think the European banks are most of them have deposit insurance.
And the problem is that people start -- their money out of banks think they're going to be -- -- you have massive bank runs and banks will go out of business go under.
On their own forget about you know whether they have bad debts they will just implode so that's another stupid that's another step they're calling on Europe to take.
An obviously.
It's something that the president did -- -- but this is key growth.
The president is talking about you know not cutting back on sort of fiscal stimulus would you like -- -- not you know he doesn't think it's a good time to to basically cut spending right now you need people to work.
Hot he doesn't think that these austerity measures are -- are essentially good medicine if you look at what happened in the US afternoon during a banking crisis.
Lots of fiscal statement but lots of monetary stimulus you know obviously you know capital injections.
And increased we crew we upped our deposit insurance from 150 to 25 250000 -- where people will be covered.
And yes then you had stimulus plan you know would be like in -- -- we had -- we had a fiscal stimulus.
But Republicans called for stimulus -- called for in terms of tax cuts but clearly we -- -- try to stimulate the economy and I think that's the playbook.
That they're trying to push over there whether it's.
But I -- just tell you this if the people tell me that they have receptive ears over there that they understand the problem that they're moving.
Cautiously towards up from the the difference between here and they resist it's it's and -- scope I mean you know Hank Paulson.
And -- going according to room put guns he had and they say you're gonna do explains -- in all the banks say yes that's the primary regulator -- hurting.
All these different countries all these different banks together in getting in -- more on the same page it's it's a much more difficult situation but.
They believe meeting the president Tim Geithner that they have the template that works and that's what they should be doing there.
My question to you here is are -- fears now that the US more so than never will have to participate in -- European style bail out is that what we're hearing from the treasury sec.
I'm not hearing that just yet I mean.
There is a lot of talk come out on Wall Street about the Fed somehow playing a role and I we should also point out during the -- that Ben Bernanke Fed Chairman played obviously direct role -- in -- well.
People talk about the Fed need be.
Back stopping some buying some -- find some some of that I don't know how that works I don't know if it's politically tenable right now.
For the Fed to pay direct role in that -- remember this country where we have an election but the set you know that the senate -- move to Republicans.
We have we have -- -- hear that this is different dynamic here than over there right now means for years if the banking crisis.
People I think are fed up with the Fed you know going -- you know you know.
Going beyond its mandate -- -- did people don't want to QE3 you know people talk about you know what why so many people and investing gold right now we're about QE3.
Should the USB putting on its balance sheet which -- grown dramatically because of the current banking crisis here.
Got stuff from over there.
I don't I don't.
I don't think it's gonna happen there may be stuff around the -- member -- the Fed did play a role stabilizing some European banks during the financial crisis figured if those banks have problems it can affect us so.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- Be nice to see what would.
Short Morgan Stanley has right now because Morgan Stanley for some reason is highly correlated to -- York.
Investors believe even though.
James Gorman sealed envelope of Morgan Stanley has -- on our show and you know we've reported that -- they're they're fairly hedged that they don't have the massive problems that I think.
Some people thought earlier.
Do we -- we're gathering -- now they up both banks are today but why don't we have more -- -- within a quarter percent quarter.
That's the proxy for Europe because that investors really still believe that they're they're highly correlated to.
You know that they I mean much in this is true that they eat the -- investors think is that they underwrote a lot of the credit defaults are too big to fail on the contagion but it's -- that it but I would I would say if you look at for proxy.
Watch Morgan -- the reason why is because investors think.
They underwrote credit default swaps as insurance policies on the bad European debt.
-- and have some exposure to banks over there.
So I think that's fair James Gorman as the night.
But look at that as a proxy when things in Europe get better Morgan Stanley shares go up when we hear when we get bumps in the road like Greece or whatever -- start to tax.
Interesting -- airport thanks Morgan Stanley watching as a --
