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.
Treasury Secretary Tim Geithner is on a "charm offensive," reports the Wall Street Journal. Ample evidence of this is provided by a glossy feature in Vogue (not available online) that lays only the most velvet of gloves on the beleaguered secretary's body.
- "I am," [Geithner] says, seated in his Washington, D.C., office, an intimidatingly ornate room worthy of a Hogwarts headmaster, "incredibly angry at what happened to our country."
- What probably rankles most, however, is the notion that Geithner himself is motivated by a desire to cozy up to Wall Street ... [Geithner's] found it a bit galling to have his motivations questioned. "For the first time in my life," he says, "all my judgments are being seen through this prism that I am somehow here to protect and defend this industry" -- the financial sector -- "even though I am constantly in a fight with them. They think I am being too tough on them with reform. They complain we don't listen to them."
Constantly in a fight? The Wall Street Journal demurs:
Interviews with dozens of government officials show that Mr. Geithner has acted as a brake on administration officials seeking punitive action against big financial firms.
Last year, in a previously unreported move, he resisted efforts to oust Citigroup Chief Executive Vikram Pandit as a condition for more government aid, according to administration officials. He successfully argued against ripping up contracts that controversially allowed millions of dollars in bonuses to be paid to American International Group employees...
Mr. Geithner also has pushed for banks to repay government funds (making them raise private capital instead) in defiance of some lawmakers and government watchdogs who said the firms should remain under Treasury's thumb until they resume lending to help the economy.
If Geithner finds it galling to have his motives questioned, then perhaps he should let a little more of his anger at what happened to our country show, and maybe he shouldn't be so assiduous in defending Wall Street against the predations of other administration officials. There's still time to redeem himself. Sen. Chris Dodd will reveal his version of a financial regulatory package next week. If Geithner wants to leave a mark on history that will be remembered fondly by more than just Wall Street, he will need to lead the fight to make sure that fight has some teeth.
Of course, it's also possible that history won't remember him, period. In perhaps the most hurtful piece of reporting of all, the Journal notes that "A January Wall Street Journal/NBC poll found 54 percent saying they either didn't know Mr. Geithner's name or were unsure of their opinion, up from 51 percent a year earlier, despite rising public discontent over bailouts and bonuses."