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The Geithner mystery solved

Mon, 19 Sep 2011 10:20:00 +0000

(updated below - Update II)

Reviewing "Confidence Men" -- Ron Suskind's new book critically examining President Obama's management of the financial crisis -- The New York Times' Michiko Kakutani ponders this mystery raised by Suskind:

[] Mr. Suskind suggests that the administration's problems in dealing with the fiscal crisis began with the president's choice of his economic team. He wonders why Mr. Obama turned away from the advisers who had seen him through the campaign (including more progressive thinkers like Mr. Stiglitz, Robert Reich and Austan Goolsbee), and relied instead on two men associated with the deregulatory policies of the past, Mr. Geithner, the Treasury secretary, and Mr. Summers, the chief economic adviser. Both men had served in the Clinton administration (with Treasury Secretary Robert E. Rubin, who would later join Citigroup as a senior adviser and board member); their actions, Mr. Suskind contends, "had contributed to the very financial disaster they were hired to solve."

Geithner refuses to talk about default plans

Mon, 25 Jul 2011 12:26:00 +0000

Hitting the Sunday talk show circuit, Treasury Secretary Tim Geithner refused to talk about any contingency plans in place for Congress and the administration failing to raise the debt limit by the Aug. 2. deadline.

"It's unthinkable that this country will not meet its obligations on time," Geithner told CNN's "State of the Union." Despite it being "unthinkable," Geithner met with Federal Reserve Chairman Ben Bernanke and Federal Reserve Bank of New York President William Dudley on Friday to discuss the implications of the country defaulting on its debt.

On "Fox News Sunday," Geithner repeatedly deflected host Chris Wallace's questions about the details of a contingency plan. "We do not have the ability, Chris, to protect the American people from the consequences of Congress not taking that action," Geithner said.

Watch Geithner avoid the specifics with Wallace in the clip below, via Mediaite:

Geithner: “Failure is not an option” on budget deal

Mon, 11 Jul 2011 11:12:00 +0000

Appearing on CBS' "Face the Nation" Sunday, Treasury Secretary Timothy Geithner spoke out against lawmakers like Michele Bachmann who have claimed the administration is using scare tactics to over-hype the debt crisis.

"On Aug. 2., we’re left running on fumes," Geithner told host Bob Schieffer. "We have no capacity to borrow... We have to act; Congress has to act ahead of that point. If they don’t act, then we face catastrophic damage to the American economy."

Geithner expressed confidence that a deal would be reached ahead of the Aug. 2. deadline, but noted that whether or not the deal would be good for the economy was a different matter. He told Schieffer that the Obama administration faced a difficult task in trying to broker the "biggest deal possible."

Watch Geithner's appearance below, via CBS:

Tim Geithner’s Jim DeMint smackdown

Wed, 29 Jun 2011 21:18:00 +0000

Treasury Secretary Timothy Geithner doesn't have many fans among progressive Democrats, but even the most hardhearted critic of his Wall Street-friendly regime might be able to take some satisfaction in the dressing down he delivered on Wednesday to Sen. Jim DeMint, R-S.C.

DeMint is one of the most prominent supporters (along with presidential candidate Michele Bachmann) of the notion that the U.S. government won't automatically default on its obligations if Congress fails to raise the debt limit. DeMint believes that Geithner can "prioritize" interest payments on debt over other government spending commitments, and thus escape a failing grade from the bond markets.

This has always been a ridiculous notion, but Geithner's letter provides the most in-depth and strongly worded rebuttal we've heard from the Obama administration so far.

Some key excerpts:

Tim Geithner’s plan to lose the 2012 election

Wed, 08 Jun 2011 16:37:00 +0000

Zach Goldfarb's much-buzzed-about Washington Post profile of Treasury secretary Tim Geithner boils down to this: Geithner was and is the primary architect of the Obama administration's pivot from the economy to the deficit. Furthermore, since Geithner now reigns supreme on economic policy, there is zero chance of any change of direction in the next year. All the advocates for greater attention to boosting economic growth and job creation in the short term -- Christy Romer, Jared Bernstein, Austan Goolsbee, and even the much-hated-by-progressives Larry Summers -- are gone. Geithner is what we've got.

Geithner's stated position is that without long-term action on the deficit, the government will not be able to continue to support social welfare programs.

Geithner says Obama must tackle the deficit now if he wants the government to be in a position to support the economy in the future and to continue to protect the elderly and the poor.

"It's been my view for some time that unless he played a major role in shaping and negotiating the broad fiscal framework... we would be left without the capacity to do a whole range of things that are really important," Geithner, 49, said in an interview. "I have been a consistent advocate of him doing that early and often."

Beyond the debt ceiling barrier

Tue, 17 May 2011 20:15:00 +0000

On Monday, the U.S. government technically breached the debt ceiling, breaking through the $14.2 trillion barrier. On Tuesday, economic chaos somehow failed to materialize. The bond market evinced utter calm, even boredom, at the news (in fact, the yield on a 10-year Treasury bond fell to its lowest mark since last December, which is the very definition of abject complacency). Members of the U.S. Congress, currently on recess, could hardly wrangle up the energy to deliver the same old tired boilerplate.

In large part the lack of reaction has to do with the fact that everyone concerned already knew that the technical breach of the ceiling would be a non-event. Secretary of the Treasury Tim Geithner has been explaining for months that the government was prepared to avail itself of a familiar set of accounting tricks to postpone the date when the government could no longer pay its bills outright. Monday's real news was Geithner's letter informing Congress that -- as of May 16 -- the Treasury had stopped investing in a couple of government employee retirement funds -- a legally authorized move to gain some breathing space that has been made several times before in previous debt ceiling squabbles.

Geithner: U.S. has hit debt ceiling

Mon, 16 May 2011 16:27:00 +0000

Treasury Secretary Timothy Geithner said Monday that he will immediately halt investments in two big government pension plans so the government can continue to borrow money.

Geithner informed Congress of his decision in a letter stating that the government had officially reached its $14.3 trillion borrowing limit. He repeated a warning that if lawmakers do not increase the borrowing limit by August 2, the government is at risk of an unprecedented default on its debt.

The debt limit is the amount of money the government can borrow to help finance its operations. The nation has reached its debt limit because the federal government has grown accustomed to borrowing massive amounts of money. The latest estimate is that it borrows 40 cents for every dollar it spends.

Republicans have said they will not vote to raise the borrowing limit until Congress and the White House agree on a plan to reduce the deficit through spending cuts. House Speaker John Boehner last week those cuts should be larger than any increase in the debt ceiling.

A performance review for Timothy Geithner

Sun, 15 May 2011 18:01:00 +0000

It's no secret that Treasury Secretary Timothy Geithner has an image problem, although part of it may just be a visceral response to his appearance or demeanor. Virtually every published image of the man has him looking up at some congressional panel, where he sits coiled up tight like a snake defending its turf. Of course, there was also his work as the president of the Federal Reserve Bank of New York during the 2008 market collapse, when he was integral in shaping the Troubled Asset Relief Program (TARP).

Geithner conducts himself in front of the camera as if it's the numbers, not his image, that are his primary concern -- a trait that was on full display this past week, when he was in the spotlight on two pivotal issues. With the U.S. set to exceed its $14.29 trillion debt ceiling, Geithner detailed the measures his department will implement to buy Congress a few more weeks to reach a compromise. On this he was clear: Should Congress fail to raise the debt ceiling, then bottled water, canned beans and shotgun shells will replace U.S. Treasuries as the world's safest investment.

The dumb and dumber debt ceiling fight

Fri, 22 Apr 2011 18:32:00 +0000

Senator Pat Toomey, R-Pa., proposed an interesting theory on Friday: It's Treasury Secretary Tim Geithner's fault if a failure to raise the debt ceiling results in the U.S. defaulting on its bond obligations.

Toomey reasons that Geithner has the freedom to pick and choose what debts the U.S. should pay. Since just about everyone agrees that defaulting on bond payments would precipitate a major international economic crisis, possibly kicking of another recession, and end the dollar's preeminent status as the world's preferred reserve currency, Toomey believes that Geithner should simply choose to pay those debts first and stiff other creditors, like, for example, Americans getting unemployment benefits or Social Security checks.

From The Hill:

Geithner confident Congress will raise debt limit

Sun, 17 Apr 2011 13:30:00 +0000

Treasury Secretary Timothy Geithner (GYT'-nur) says Republicans are assuring the administration that they will pass an increase in the government's borrowing limit in time to prevent an unprecedented default on the nation's debt.

Geithner tells NBC's "Meet the Press" that Republicans gave this assurance to President Barack Obama at a White House meeting last Wednesday.

Geithner says Republican leaders told Obama that they recognized that they couldn't play around with the government's credit rating and he's confident Congress will act in time.

Geithner has told congressional leaders that the U.S. will reach the current debt limit of $14.3 trillion no later than May 16. He has said he will have a few options he can use that would delay a possible government default until about July 8.

Treasury’s wily plan to fix the housing market

Fri, 11 Feb 2011 23:09:00 +0000

On Friday, the Obama administration released its plan to wind down Fannie Mae and Freddie Mac, the two giant government-run mortgage lenders that currently are responsible for backstopping a ridiculous 85 percent of the U.S. residential home loan market.

Or rather, the government delivered a compelling explanation of why Fannie and Freddie must be wound down, along with three proposals on how to do it, varying roughly along a spectrum in which government involvement in the mortgage market ranges from minimal to significant. The basic goal is transfer the business of making loans away from the government and back to the private sector, while at the same time minimizing chances for a system-wide crash, and ensuring some reasonable level of access to credit for would-be homeonwers.

The great debt ceiling dance officially begins

Thu, 27 Jan 2011 17:28:00 +0000

On Thursday. The U.S. Treasury released a terse announcement:

"Beginning on February 3, 2011, the balance in the Treasury's Supplementary Financing Account will gradually decrease to $5 billion, as outstanding Supplementary Financing Program bills mature and are not rolled over. This action is being taken to preserve flexibility in the conduct of debt management policy."

The Treasury's Supplementary Financing Program is designed to help counteract some of the negative effects of the Federal Reserve's efforts to inject liquidity in the economy. It's basically an accounting mechanism that aims to absorb some of the excess reserves created when the Fed buys assets -- like crappy mortgage-backed securities. Right now, the account holds around $200 billion.

Geithner urges Congress to raise debt limit

Thu, 06 Jan 2011 16:17:00 +0000

WASHINGTON (AP) -- Treasury Secretary Timothy Geithner is urging Congress to raise the nation's debt limit, arguing that failure to do so could affect millions of American jobs.

Geithner says in a letter to congressional leaders that the government will reach the limit on how much it can borrow between March 31 and May 16. He says that not increasing the debt limit could lead to job losses, noting inaction could drive up interest rates and make it more costly for U.S. companies to borrow money.

Geithner's warning is directed chiefly at Republicans, who are vowing to block an increase in the debt limit and use the fight to restrain government spending.

Geithner to have surgery for kidney stones

Fri, 10 Dec 2010 16:45:00 +0000

Treasury Secretary Timothy Geithner has been admitted to a hospital where he will undergo minor surgery to deal with a kidney stone.

Treasury spokesman Steve Adamske said Geithner began experiencing severe pain from a kidney stone during the night and was admitted to George Washington University hospital Friday morning.

Adamske said that Geithner will have what he called a "minor surgical procedure" performed Friday afternoon and expects to be back at work on Monday.

Treasury Secretary Bloomberg? Not a chance

Wed, 01 Sep 2010 22:20:00 +0000

Last November, the New York Post suggested that the Obama administration was considering JP Morgan CEO Jamie Dimon as a possible replacement for Treasury Secretary Timothy Geithner. The notion was ridiculous for an abundance of reasons, indeed, with each day that has passed since then, the idea has become even more absurd.

But is the Post chastened? Hardly. Today, the Post is backing a different horse for the same job: New York Mayor Michael Bloomberg.

The evidence? President Obama and Bloomberg played golf together last weekend.

Asked about last weekend's four-hour golf game with President Obama on Martha's Vineyard, Bloomberg told reporters yesterday, "The economy was the main subject, other than discussing golf."

Now there are whispers that the president went even further and sounded out Bloomberg about whether he would join his foundering economic team as treasury secretary, replacing prime blame-target Timothy Geithner.

"Obama needs Bloomberg more than Bloomberg needs Obama," a source tells us. "Obama's looking to do something bold and credible before the election."

Cannes: How the bankers fleeced the world

Wed, 19 May 2010 15:20:00 +0000

CANNES, France -- If you don't quite get what happened to the global economy over the last two years, or who's at fault, you're not alone. Indeed, that's nearly everyone's situation. The big crash of 2008 and 2009 and its ongoing ripple effects -- such as the European fiscal crisis that's rendering my visit to France a little cheaper every day -- seemed to come from nowhere as if by natural causes, as unpredictable and unmanageable as the Icelandic volcano or a Gulf Coast hurricane.

Charles Ferguson is here to tell the world that the crisis that wiped out trillions of dollars in wealth, threw millions of people out of their homes and out of work, and further widened the gulf between rich and poor was no accident. It was a crime. Ferguson, a former software entrepreneur and policy-wonk scholar turned filmmaker, is definitely no left-wing bomb-thrower or closet Marxist. But he plays one in the movies, you might say. His new documentary, "Inside Job" -- arguably the smash hit of Cannes so far -- offers a lucid and devastating history of how the crash happened, who caused it and how they got away with it.

Healthcare? Done. Next up: The banks

Tue, 23 Mar 2010 18:07:00 +0000

Now that healthcare is done, what's next? The most obvious suspect: financial reform. Mark Ambinder says getting a bill passed should be an "easy political victory." The New York Times suggests that Republicans are willing to cut a deal. And in a surprise move, on Monday the Senate Banking Committee voted, on a strictly partisan 13-10 vote, to pass the bill out of committee and send it straight to the Senate floor. In a statement, President Obama applauded the move, declaring that "we are one step closer to passing real financial reform."

So we're moving right along?

Tim Geithner: Wall Street vengeance isn’t mine

Mon, 08 Mar 2010 18:54:00 +0000

What do we learn that we didn't already know about Timothy Geithner, after reading 15000 freshly pixellated words about him this morning? Not a whole hell of a lot, really, except that the economy must be doing a lot better than it was a year ago, because the Treasury Secretary sure seems to have plenty of time to spare these days for press interviews.

Which is, of course, the point. An underlying theme to both Joshua Green's epic profile in The Atlantic and John Cassidy's more restrained treatment in The New Yorker is that, due in no small part to the efforts of Geithner, the economy is in much better shape than it was a year ago. Financial markets have stabilized, Wall Street's biggest financial institutions do not appear to be on the verge of bankruptcy, and the sense of widespread panic has more or less dissipated.

Tim Geithner’s unconvincing charm offensive

Mon, 22 Feb 2010 19:23:00 +0000

In his new book, "Freefall: America, Free Markets, and the Sinking of the World Economy," Joseph Stiglitz, while critically discussing the team of economic advisors assembled by President Obama, punctures Treasury Secretary Tim Geithner with a line that was painful for me to read.

"Of course, he gave speeches warning of the dangers of excessive risk-taking," Stiglitz wrote, referring to his tenure as president of the Federal Reserve Bank of New York. "But he was meant to be a regulator, not a preacher."

The truth hurts. As longtime readers know, I was initially delighted at Geithner's appointment as Treasury secretary, largely on the basis of a speech he gave in 2006 warning about the systemic risk posed by unregulated derivatives trading.

At the time, I found his position striking because he was the only person in a position of regulatory authority who was doing so much as warning about potential problems. But in retrospect, that proves to have been a slender thread upon which to hang hopes of transformative change, and today, a combined one-two punch from Vogue and the Wall Street Journal proves this point, yet again.

Are Geithner’s days numbered?

Tue, 02 Feb 2010 20:50:00 +0000

Simon Johnson, the MIT economist newly named contributing business editor at the Huffington Post, published a scoop this morning:

The White House is floating, ever so gently, the notion that they are open to nominations for the position of "Tim Geithner's Successor."

Via e-mail Johnson told me only that the news came from "a very good source" and acknowledged that it might be "White House disinformation ... or some more complicated game.

Although I can construct a scenario in which Geithner's lack of enthusiasm two weeks ago for Obama's new banking regulatory initiatives, combined with his unpopularity with both the left and the right, might be encouraging the White House to look for ways to jettison him, it still seems like an awfully risky strategy, more likely to fuel perceptions of White House chaos than anything else.