Market Sees Rising Chance That Geithner Will Be Out At Treasury, Taking AIG Blame Won't Help
The calls for the head of U.S. Treasury Secretary Tim Geithner are growing daily and with news breaking late tonight that Geithner is taking the blame for the AIG (NYSE: AIG) bonuses, this trend will likely continue.
inTrade, the prediction market which lets folks trade on political futures, is seeing an increasing chance that Geithner will depart.
The inTrade contract predicting if Geithner will depart before midnight on 30 Jun 2009 has doubled from 10 to 20 since the beginning of March. A 20 means the market predicts there is a 20% chance that this event happens. The Dec 2009 contract is up 10 points to 36.
Tonight, Geithner told CNN that his department asked Sen. Christopher Dodd to include a loophole in the stimulus bill that allowed AIG to keep its bonuses. Geithner said the Treasury Department was concerned the government would face lawsuits if contracts were breached for the bonuses.
In addition to the AIG bonus situation, the details of the delayed-yet-all-important Public-Private Investment Fund have yet to be announced. Geithner's original announcement was already a big flop.
It would be a massive blow to the Obama administration if Geithner has to be fired, but leaving him in could be even worse.
You can view the inTrade Geithner contracts here.
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