If Treasury Secretary Timothy Geithner plans to distinguish his own handling of the banking crisis from that of his predecessor, Hank Paulson, he's going to need to come up with some big surprises when he unveils the new, improved, Wall Street bailout plan late Tuesday morning. Because judging by a blockbuster New York Times article by Stephen Labaton and Edmund Andrews published Tuesday night, "Geithner Said To Have Prevailed On Bailout," so far, Geithner is looking a lot like Paulson 2.0.
The article is distressing on a number of a levels.
First, there's the overall argument: that Geithner successfully argued for a more lenient approach towards the banks than Obama's "top political hands."
Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid.
He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.
There might be a new sheriff in town at the E.P.A., but evidently not at the Treasury Department. For those of us who were initially enthusiastic about Geithner's selection as Treasury Secretary, due to his track record warning Wall Street to clean up its unregulated credit derivatives mess, Geithner's emergence as a defender of the status quo forces a reevaluation. This isn't the tough love we were looking for.
Second, there's Geithner's reasoning for his stance.
But officials said Mr. Geithner worried that the plan would not work -- and could become more expensive for taxpayers -- if there were too much government involvement in the affairs of the companies.
Mr. Geithner also expressed concern that too many government controls would discourage private investors from participating.
There is zero difference here from the line of argument that Hank Paulson pursued in his testimony before the Senate explaining why he was opposed to including any limits on executive compensation in his original bailout plan. Judging from those two paragraphs, Geithner might as well be Paulson -- the change in White House occupancy has not changed Treasury timidity one iota.
Finally, there's the very fact of this article's publication at all. It's impossible not to conclude that within the White House, the knives are already out for Geithner. Despite David Axelrod's protestations to the contrary -- he claims he was ultimately satisfied by Geithner's plan: "I didn't come away disappointed in any way" -- a major scoop detailing the Treasury Department's intention to go easy on Wall Street cannot possibly be the media message the Obama administration was hoping to push during this critical week. Obama looks like he's lost control of the message, and Wall Street, once again, is calling the shots. And some people on his team are not happy about that, or they wouldn't be leaking to the New York Times.
As for the actual details of the plan? There have been so many widely varying reports over the last 72 hours that at this point it seems wise to just wait a couple more hours, until Geithner officially shows what he has. Then the real feeding frenzy can begin.