(image by Bill Black)
Remember nine months ago when Timothy Geithner assured us that it was "extremely unlikely" he would take a position on Wall Street?
The media meme when Geithner announced that we was stepping down as Treasury Secretary and taking a position as a "senior fellow" with the Council on Foreign Relations (CFR) was what a superior human he was for not taking a job with Wall Street. The "extremely unlikely" (to no one's surprise) was announced nine months later. The private equity firm Warburg Pincus has hired Geithner as its President.
"The unusually low-key announcement -- made with little fanfare on a Saturday morning -- is Mr. Geithner's first foray into the private sector in 25 years, after serving in the Treasury Department, the International Monetary Fund and the Federal Reserve Bank of New York."
The IMF and the NY Fed are far more private than public and they both exist primarily to serve banks. They NY Fed is owned by the private banks it supposedly examines and supervises and the banks elect bankers to act as the NY Fed's directors (including until very recently the supposed "public interest" directors). They are not subject to U.S. government caps on pay, and in the case of the IMF the employees have their pay increased to compensate for the U.S. taxes they are supposed to pay (which Geithner did not pay for many years). Geithner's disastrous "public service" at the NY Fed and the IMF made him a multi-millionaire at great cost to the public.
The NYT is typical in acting as if Geithner first held a leadership position in 2008 (he was made head of the NY Fed in 2003).
"As president of the New York Fed in 2008, Mr. Geithner helped lead the federal government's response to the financial crisis, including the sale of Bear Stearns and the bailout of the American International Group."
The NY Fed, of course, was supposed to be the leading examiner and supervisor of many of the Nation's largest banks and bank holding companies. Geithner was the top regional supervisor during the key years of the three epidemics of control fraud that drove the financial crisis and the NY Fed drew special criticism for its total failure as a supervisor during the crisis. Naturally, President Obama responded to his failures by promoting him. The NYT whitewashes Geithner's role as the Fed's top regional supervisor out of history. The fact that Geithner used AIG to secretly bail out some of the world's largest banks (at the direct expense of the U.S. government) also disappears from the paper's account.
Geithner's new employer, however, seeks to outdo the NYT by preventing any account of what it cost to change Geithner's "extremely unlikely" into "where do I sign" from ever becoming public. Neither the firm nor Geithner want the public to learn how lucratively the bankers reward the anti-regulators.
"His new employer, Warburg Pincus, is a 47-year-old private equity firm that oversees $35 billion in assets. [T]he firm has remained privately held and has kept a low profile."
Because Warburg Pincus (WP) is privately held we may never know Geithner's compensation. Even the NYT concedes that Geithner is an example of how Wall Street ensures that the revolving door makes wealthy its supporters in high government positions once they resign and that Geithner proves that this has nothing to do with the former official's merits or fitness for the private sector position.
"Since leaving the Treasury, Mr. Geithner has joined the Council on Foreign Relations as a fellow and has taken paid speaking engagements.
Mr. Geithner follows in the path of past Treasury secretaries who, after leaving government, have accepted lucrative Wall Street posts. After leaving the Clinton administration, Robert E. Rubin joined Citigroup. And John W. Snow, a Treasury secretary in the George W. Bush administration, joined the private equity firm Cerberus.
While Mr. Geithner has been given the lofty title of president, several private equity executives questioned whether he would be much more than a prominent name who would help Warburg Pincus open doors on the fund-raising side, especially with foreign investors like sovereign wealth funds.
Unlike past Treasury Secretaries Henry M. Paulson Jr. and Mr. Rubin (both alumni of Goldman Sachs), Mr. Geithner has been a public servant for most of his career. He has never worked at a bank, and he has no experience making private equity deals."
Geithner is not a financial expert, but that was no bar to making him the head of the NY Fed or Treasury. The bankers and their political allies put the Geithners of the world in positions of increasing power not despite their weaknesses and failures but because of their willingness to aid the bankers even when doing so will betray their office. Geithner "has been a public servant" as long as one recalls that in this world this means being made a millionaire to lead a mostly private bank (the NY Fed), owned and run by and for the big banks, into its worst supervisory failures in its history at the (massive) expense of the public -- which the bankers and the NYT term as being a "servant" of the "public." Ryan Grim has a nice piece emphasizing that Geithner, as Treasury Secretary, issued the insipid regulation that was weakened to the point that it would please the private equity industry.
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