With his new book Stress Test: Reflections on Financial Crises coming out next week, former Treasury Secretary Tim Geithner gave a big interview to Andrew Ross Sorkin at the New York Times to start shaping a narrative about his role in the financial crisis.
One revelation is that while Geithner was supposed to be figuring out a way to make sure banks couldn’t be too big to fail, he never really thought it was an achievable goal, saying that it is “like Moby Dick for economists or regulators. It’s not just quixotic, it’s misguided.’’
Geithner tried to resign multiple times
For someone who has been pilloried in many corners for being pro-bank, one of the overarching themes of the interview is Geithner wants people to know how reticent he was about his entire term of service. For one thing, he goes to great lengths to explain how he tried to convince President Obama that we was the wrong person for the job, that Larry Summers or Robert Rubin would be a better choice, and then repeatedly tries to resign (once a couple months into Obama’s term and then repeatedly from 2010 on).
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Geithner also says that he regrets not pushing harder for stronger safeguards for the financial institution before the crisis and that he wishes he could have expanded programs for homeowners sooner, but says that he did as much as he could within the limits of his resources and authority.
Geithner didn’t want to ‘own’ bonuses
While he understood that trying to sound more like a populist might have made him more popular and his policies easier to swallow, Geithner says that he never viewed Wall Street “a cabal of idiots or crooks,” and that the senior executives he dealt with seemed intelligent and ethical. At one point, given talking points by President Obama meant to show outrage over bankers’ bonuses, he simply skipped them. He thought the fake outrage would seem ridiculous, and anyways if the administration pushed too hard on compensation packages he was afraid they would own an issue they couldn’t really address.
Geithner also tells an interesting anecdote about former President Bill Clinton, who basically told him that there was no point in trying to appease populist sentiment anyways.
“You could take Lloyd Blankfein into a dark alley,” Clinton said, according to Geithner, “and slit his throat, and it would satisfy them for about two days. Then the blood lust would rise again.”