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Grading Geithner -- And Waiting For Obama

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I disagree. Geithner's stature is diminished by proximity to Clinton Treasury Secretary Robert Rubin, a truly transformative figure who paved the way for massive bank deregulation and the introduction of catastrophically risky "financial innovations." Geithner was an excellent manager, but he wasn't transformative.

Geithner followed the Rubin score, note by note, even after it had been completely discredited by events. That's like lip-syncing to Milli Vanilli.

"In various encounters over the years," Yglesias writes, Geithner has "invariably stood out for his genuinely funny but very dark humor and keen sense of irony." I don't know about that either. My only encounter with Geithner was markedly lacking either in humor or irony. Maybe the missing ingredient in our encounter was Yglesias himself, who was scheduled to attend but was detained at the gate.

Tellingly, Yglesias describes Geithner as "a man who strongly believes there's a tension between doing the right thing and doing the popular thing." I think that's a good description of a profoundly and reflexively anti-democratic worldview -- there doesn't have to be a tension between the two, after all -- one that's driving much of the economically misguided "bipartisan" consensus thinking in Washington today.

If you want a "colossus" as Treasury Secretary, here's a shout-out to Lyman P. Gage. After all, Geithner never had to defend the Gold Standard. He built nothing that will last, and even the footprints he left in the sand weren't his own.

Grading Geithner

Geithner led the TARP bailout, which he and others misleadingly characterized as having "made money for taxpayers." Taxpayers are still on the hook for toxic assets, in fact, and lost enormous sums of investment income through the program.

Geithner told The New Republic that he always knew "it was going to be very hard, if not impossible to design a financial rescue that was going to be effective in protecting all the innocent victims hit by the crisis and still satisfy the completely understandable public desire for justice and accountability." That sounds like a statement of personal values: If ten million people were victimized by banks, but rescuing them might benefit a few thousand cynical small-time speculators, then they mustn't be rescued. He had no such qualms about rescuing Lloyd Blankfein.

Geithner, and later the President, also falsely claimed that the unethical things done by Wall Street bankers weren't "illegal." That wasn't true (see "Burden of Proof") and was a moral low point for justice in the first Obama term. And as Chief Trustee for the Social Security Trust Fund, Geithner chose to use his influence in an attempt to cut the program via the destructive European-style austerity of the Simpson Bowles proposal (a private document co-authored by the chairs of a failed deficit commission).

Geithner knew about the Libor scandal in 2007, wrote a sternly worded "cover your ass" memo, and then promptly ignored the entire affair.

Worst of all, he bailed out a number of banks that should have immediately been liquidated after the financial crisis. Chief among them was the disastrous wreck known as Citigroup. The creation of this incompetently-run megabank was made possible by Geithner's predecessor Robert Rubin, who then joined the bank after leaving office and promptly became fabulously wealthy. Geithner also allowed the criminally mismanaged Bank of America to stay in existence, along with the crime-ridden JPMorgan Chase.

Goldman Sachs and scandal-plagued GE Capital weren't even banks, but Geithner and the Fed bent the rules so they could become banks. Then they were rescued too.

The Treasury Department and Federal Reserve used trillions of dollars in taxpayer money to rescue these institutions, which will almost certainty cause even greater damage in the future if left unchecked. And, under Geithner's direction, they asked for absolutely nothing in return. (A new Inspector General report suggests that Geithner's team allowed executives to receive excessive pay packages in violation of government bailout guidelines.)

Unanswered questions also remain about reports that Geithner inappropriately leaked information to bank executives about an upcoming Federal Reserve interest rate cut, which would have been an extremely lucrative piece of insider information.

Where it mattered most, Geithner failed one test of leadership after another.

The Believer

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http://www.huffingtonpost.com/rj-eskow/the-dumbest-bipartisa

Host of 'The Breakdown,' Writer, and Senior Fellow, Campaign for America's Future
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Geitner let the criminals off the hook and let the... by Poor old Dirt farmer on Wednesday, Jan 30, 2013 at 8:28:27 AM
Consider the alternatives, the economists Obama co... by Daniel Vasey on Wednesday, Jan 30, 2013 at 9:22:52 PM
You were generous to Geithner, and this is to your... by Walter J Smith on Thursday, Jan 31, 2013 at 2:57:17 AM