Geithner: Look forward in anger

August 4, 2009

So Timothy Geithner went ballistic and started throwing around some obscenities during a meeting at the Treasury over the slow pace of financial regulatory reform.

Well, good for him. It’s about time someone in the Obama administration got a little red in the face over the financial crisis.

But here’s the thing: the Treasury Secretary’s temper tantrum was misdirected and he ended up taking his anger out on the wrong parties. The people Geithner really needs to be delivering a few choice words to are the nation’s bankers — especially the ones who were bailed out by U.S. taxpayers and now act as if last fall never happened.

What’s really needed now is for Geithner to get in the face of big bank honchos like JPMorgan Chase’s Jamie Dimon and Bank of America’s Ken Lewis and tell them to start moving on mortgage modifications, in order to keep people in their homes and stop the wave of foreclosures.

He needs to read the riot act to Goldman Sachs’ Lloyd Blankfein and tell him the government didn’t save his firm so it could go back to running the biggest hedge fund in the world.
And Geithner should muster up the necessary vitriol to tell Citigroup’s Vikram Pandit it’s time for him to pack his bags and leave town. Pandit’s decision to move back into risky proprietary trading is an indication that Citi, aka The Bank of the United States, will never change its ways under its current leadership.

Now I’ve got no problem with Geithner losing his cool with Mary Schapiro in the room, as The Wall Street Journal and Reuters reported he did. (Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corp Chairman Sheila Bair also attended the meeting.)

The verdict is still out on whether Schapiro has the stomach to shake the lethargy out of the Securities and Exchange Commission, given her uneven track record at the Financial Industry Regulatory Authority and its predecessor regulator, NASD.

Bernanke, despite bearing a lot of the blame for getting us into the crisis, has performed rather admirably since the collapse of Lehman Brothers. It’s fair to say that the steps taken by Bernanke to pump liquidity into the financial system have done more to stabilize the economy than anything the Obama administration has done.

And Bair is the only regulator — maybe the only public official in Washington — who seems to be thinking outside the box these days when it comes to overhauling the financial system. Her call for some sort of special tax on too-big-to-fail banks may be the best way to rein in unbridled risk taking at Wall Street firms like Goldman.

So, by all means, get mad, Tim Geithner. But next time please sink your teeth into the people responsible for getting us into this mess and who remain as unapologetic as ever for their actions.


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