Former Treasury secretary Timothy Geithner—"the man most responsible for the federal bailouts of 2008"—admits that he didn't see the mortgage crisis coming and didn't grasp the severity of the problems after it occurred,"
writes WSJournal editor James Freeman in a review of Geithner's book,
Stress Test: Reflections on Financial Crises.
One of the themes in "Stress Test" is Mr. Geithner's difficulty in understanding the health of large financial firms. He admits that he didn't see the mortgage crisis coming and didn't grasp the severity of the problems after it appeared. He didn't require that the banks he was overseeing raise more capital because his staff's analysis couldn't foresee a downturn as bad as the one that occurred.
None of this is particularly surprising in a man who, at the time he became president of the New York Fed, had never worked in finance or in any type of business—unless one counts a short stint in Henry Kissinger's consulting shop. At Dartmouth, Mr. Geithner "took just one economics class and found it especially dreary." After three years at Kissinger Associates, he spent 13 years at the Treasury Department, becoming close to both Robert Rubin and Larry Summers, and then worked at the government-supported International Monetary Fund. Messrs. Rubin and Summers recommended him to run the New York Fed. "I felt intimidated by how much I had to learn," he writes of taking up the job in 2003.
Freeman argues that we can't know if Geithner's actions—putting American taxpayers on the hook for private company financial failures—were better or worse than the alternative.
What we do know is that, six years later, the economy is suffering through a historically weak recovery and the emergency programs haven't ended. The Federal Reserve is still providing easy credit for banks and for the U.S. government, which has racked up more than $8 trillion in additional debt since the end of 2007.
No comments:
Post a Comment