Inside Baseball: New York Times on Tres Secy Geithner

“I don’t think that Tim Geithner was motivated by anything other than concern to get the financial system working again. But I think that mindsets can be shaped by people you associate with, and you come to think that what’s good for Wall Street is good for America . . . [This] led to a bailout that was designed to try to get a lot of money to Wall Street, to share the largesse with other market participants, but that had deeply obvious flaws in that it put at risk the American taxpayer unnecessarily.”

Joseph E. Stiglitz, Nobel-winning economist at Columbia

There is a huge, 5,000 word, front page article in the NYT today on Treasury Secretary Timothy F. Geithner. The article on the former president of the New York Federal Reserve Bank is your required reading today.

You may note that two of the most quoted banking experts — Chris Whalen and Josh Rosner — are not quoted in the piece;  (They will be discussing this at our TBP conference in June)

Now for a little inside baseball stuff: They have been the ones painstakingly building the case against Geithner since his nomination. (Note the extensive usage of the former NY Fed Prez’ schedule).  The assumption, referenced in the Stiglitz quote above, is the unusually close relationships between the NY Fed Pres and the C-level execs of Wall Street’s giant financial institutions has put him in the mindset of Wall Street, not the taxpayers.

I would imagine that this piece was 3 months in the making. You can rest assured that the two boys — who are presenting a panel on banking at the upcoming conference — were educating the writers of the Times missive as to the many foibles of Turbo-tax Timmy over that period.

Go read it . . . !

Previously: Larry Summers: Wrong Man for the Job (April 4, 2009) http://www.ritholtz.com/blog/2009/04/summers/

Stiglitz: Blame Summers (April 17th, 2009) http://www.ritholtz.com/blog/2009/04/stiglitz-blame-summers/

Sources: Geithner Forged Close Ties to Finance Club JO BECKER and GRETCHEN MORGENSON NYT, April 26, 2009 http://www.nytimes.com/2009/04/27/business/27geithner.html

Geithner’s Calendar at the New York Fed http://documents.nytimes.com/geithner-schedule-new-york-fed#p=1http://www.nytimes.com/2009/04/27/business/27geithner.html

Geithner Calendar PDF http://graphics8.nytimes.com/packages/images/nytint/docs/geithner-schedule-new-york-fed/original.pdf


Originally published at The Big Picture blog and reproduced here with the author’s permission.

2 Responses to "Inside Baseball: New York Times on Tres Secy Geithner"

  1. Anonymous   May 4, 2009 at 3:08 pm

    Its not really a shocker, Paulson came from Sachs.Really who gets to complain about the club of politics and business?If this discussion really began you would have to investigate and fire everyone in D.C for conflict of interest.

  2. Guest   May 4, 2009 at 3:55 pm

    “The regional reserve banks are unusual entities. They are private and their shares are owned by financial institutions the bank oversees. Their net income is paid to the Treasury.At the New York Fed, top executives of global financial giants fill many seats on the board. In recent years, board members have included the chief executives of Citigroup and JPMorgan Chase, as well as top officials of Lehman Brothers and industrial companies like General Electric.””The ultimate tool at Mr. Geithner’s disposal for reining in unsafe practices was to recommend that the Board of Governors of the Fed publicly rebuke a bank with penalties or cease and desist orders. Under his watch, only three such actions were taken against big domestic banks; none came after 2006, when banks’ lending practices were at their worst.”n 2004, the New York Fed levied a $70 million penalty against Citigroup over the bank’s lending practices. The next year, the New York Fed barred Citigroup from further acquisitions after the bank was involved in trading irregularities and questions about its operations. The New York Fed lifted that restriction in 2006, citing the company’s “significant progress” in carrying out risk-control measures. In fact, risk was rising to dangerous levels at Citigroup as the bank dove deeper into mortgage-backed securities.” –PigsThe stinky fish is Tim’s association with BlackRock and the footnote in the AIG’s blank check to allow payoffs. Black Rock was probably just to save time, probably, and the AIG thing was to payoff Sach’s. He noted his big mistake was to not to push for increasing capitalization requirements in 2004. Yup.(but how could he look at the executive board)