Picking on Geithner
The nut graf of the NYT’s massive Geithner article today is classic Gretchen Morgenson:
An examination of Mr. Geithnerâ€™s five years as president of the New York Fed, an era of unbridled and ultimately disastrous risk-taking by the financial industry, shows that he forged unusually close relationships with executives of Wall Streetâ€™s giant financial institutions.
Um, it’s the job of president of the New York Fed to be close to Wall Street. But more to the point, this kind of adversarial reporting, based largely on the results of a Freedom of Information Act request, has been instrumental in maximizing the hermeticism and paranoia of Treasury when it comes to relationships with Wall Street. Most worryingly, the perceived toxicity of anybody with Wall Street ties has made it much too difficult to hire senior Treasury staff. And while I don’t believe for a minute that Wall Streeters have any monopoly on solutions to today’s problems, I think it’s very silly to cut them out of the discussions altogether.
To be clear, I have no problem with the NYT’s FOIA request, or with the Fed with revealing Geithner’s diary. But just as UK intelligence “sexed up” a dossier on WMDs in Iraq, I think the NYT here is trying to squeeze altogether far too much scandal out of the inherently unremarkable fact that the president of the NY Fed met regularly with senior bankers. Indeed, as both Justin and Ryan have pointed out, the story could easily have been spun entirely the other way, as showing that Geithner was consistently (if insufficiently) ahead of the curve in terms of financial-sector regulation.
In short, there is no shortage of very good reasons why Tim Geithner should feel embattled right now. So let’s not add a bunch of bad reasons to the list — doing so does no good, and possibly a significant degree of harm.