But it is now clear that Geithner never believed his own talking points. To him, too-big-to-fail and the so-called moral hazard, or safety net, that it would create can’t really ever be fully taken away. During his lecture to Summers’s class, one student asked a question about “resolution authority,” a provision of the reform laws that is supposed to let the government wind down a complex financial institution without creating a domino effect. The question prompted Geithner onto a tangent about too-big-to-fail. “Does it still exist?” he said. “Yeah, of course it does.” Ending too-big-to-fail was “like Moby-Dick for economists or regulators. It’s not just quixotic, it’s misguided.”
– From The New York Times Magazine article, What Timothy Geithner Really Thinks
Never in a million years did I think I’d ever use an article by Andrew Ross Sorkin as the basis of a blog post, but here we are. While certainly entirely unintentional, his article serves to further solidify as accurate the prevailing notion across America that former head of the New York Federal Reserve and Obama’s first Treasury Secretary, Timothy Geithner, is nothing more than an addled, crony, bureaucratic banker cabin boy.
There are so many choice nuggets in this article, all of which make Geithner look worse and worse as you read on. It’s almost as if he is some sort of lab created, android bankster butler sent back to earth from the future in order to ensure Wall Street bonuses never experience a downtick. It’s truly remarkable. Early in the article, we learn a little bit about Timmy’s family history, and how, shocker, it overlaps quite nicely with Obama’s own family history.
The following lines from this day forth should be forever referred to as the paragraph that launched a thousand conspiracy blogs. We learn that:
But Geithner and Obama had a somewhat natural rapport. Geithner, like Obama, had an itinerant childhood. His father worked for U.S.A.I.D., and the family lived in India, Zimbabwe, Zambia and Thailand. In the conversation, they discovered that Geithner’s father ran the Ford Foundation’s Asia grant-writing program in the 1980s at the same time that Obama’s mother was at its office in Indonesia. It was a nice coincidence, Geithner says, but it still didn’t make him want the job.
Well yes, quite the coincidence indeed. Also interesting that Geithner’s father worked for U.S. A.I.D., which is the organization recently revealed to have launched the fake Cuban Twitter in an attempt to overthrow the government there. In case you missed that, you can get caught up in my post: Conspiracy Fact – How the U.S. Government Covertly Invented a “Cuban Twitter” to Create Revolution. Meanwhile, Democracy now did an expose titled, Is USAID the New CIA?
While the above is certainly interesting and deserves more research on many fronts from folks far more qualified than me, let’s move on to the meat of the article and Geithner’s unique form of bankster worship. Moving along…
But Geithner’s refusal to condemn the bankers became a recurrent theme during his time at Treasury. According to Bernanke, “I didn’t and Tim didn’t go very far in lambasting individuals in Wall Street, maybe partly because we were more focused on the problem than on the politics.” Others, however, have suggested that Geithner was simply too cozy with Wall Street. He had never worked as a banker himself, but he grew up inside the bubble of elites. (Before going into government, his first job was working for Henry Kissinger at Kissinger Associates.) He was tutored at Treasury by Summers, who later worked for the hedge fund D. E. Shaw & Company, and Rubin, who came up through Goldman Sachs and eventually joined the board of Citigroup, where he has been blamed in some circles for its taking on excessive risky debt that nearly caused the firm to collapse. Each man played a significant role in deregulating the financial industry in the 1990s by supporting the repeal of the Glass-Steagall Act, which separated commercial and investment banking; they also pushed to limit future regulation of derivatives.
There you have it. Geithner and Bernanke never saw the bankers and their practices as a problem. Rather, they seemed to believe that Poseidon came out of nowhere and splashed a once in a million year tidal wave upon the system and only trillions in free money to financial criminals could save the world.
Oh, and Geithner’s first job was working for Henry Kissinger. Quite the pedigree…
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