Geithner of Oz
Earlier today I wrote that Sheila Bair is one of the few financial regulators who gets it. And by getting it, I mean not sucking up to the banks and the big money interests on Wall Street. You know, the guys (and most of them are guys), who got us into this financial mess. Tim Geithner, on the other hand, is a regulator who just doesn’t get it.
It’s not that the Treasury secretary isn’t smart–he is. And it’s not that he’s not up to job–he is. It’s that Geithner is too much of a politician and his views have been molded by people who work on Wall Street.
So, that’s why we have Geithner telling The Wall Street Journal today that Wall Street isn’t reverting back to its old ways–even though everything indicates that’s exactly what is going on. In Geithner’s world, things are getting better and the banks are becoming better citizens:
I don’t think the financial system is reverting to past practice, and we won’t let that happen. The big banks are running with much less leverage now, much more conservative liquidity cushions. There has been a significant shrinking of their balance sheets, getting rid of bad assets and cleaning up. And the weakest parts of the system don’t exist anymore.
But Geithner lives in the land of Oz. A land where we should ignore the man behind the screen and all the toxic assets that still line the balance sheets of the nation’s banks.
The trouble is the rest of us live in the real world where the roads aren’t paved with gold bricks.