The Tim Geithner Legacy Project

By Ben Walsh
January 10, 2013

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Step One in the Tim Geithner Legacy Project is complete: Barack Obama delivered a ringing endorsement of the Treasury secretary, who’ll be stepping down on January 25. Here’s the president:

“With the wreckage of our economy still smoldering and unstable, I asked Tim to help put it back together. So when the history books are written, Tim Geithner is going to go down as one of our finest Secretaries of the Treasury.”

Step Two: favorable consensus opinion. Neil Irwin writes that Geithner was “one of the most important Treasury secretaries in history” — he agrees that Geithner’s primary task was to “stop the bleeding” and that Geithner’s experience at the NY Fed made him a highly capable financial first-responder.

Joe Weisenthal pulls a chart from the Oregon Office of Economic Analysis that puts Geithner’s tenure in perspective: compared to previous financial crises — and compared to other countries recovering from the current crisis — the US job market has rebounded relatively quickly. Politico joins in the praise, and includes this gem from a former colleague: “If anything, he was quite focused on the pain the country was suffering”.

Not everybody is so positive, however. Paul Krugman isn’t sad to see him go: “Geithner has consistently been a voice urging the president to cave in for fear of upsetting the markets, with no real concern for the dangers of giving in to blackmail.”

And Binyamin Appelbaum tweeted his own take on Geithner’s legacy by pointing to an August piece headlined “Cautious moves on foreclosures haunting Obama”. The administration, Appelbaum wrote, “tried to finesse the cleanup of the housing crash”, and that caution hurt economic growth. (You can read more on the Obama Treasury’s troubled housing legacy here and here.)

What’s Step Three? Geithner told Charlie Rose that he’s unlikely to write a book after leaving office, and he’s equally unlikely to want to stay in Washington as Fed chairman. So maybe he’ll just work on his jump shot for a while before taking that inevitable highly-remunerative job at BlackRock. — Ben Walsh

On to today’s links:

Regulations
The whole system of corporate disclosure in the UK is broken – Paul Murphy

Liebor
Deutsche reportedly made $650 million in ’08 betting on everyone’s favorite rigged interest rate – WSJ

Popular Myths
Solyndra stunk — but the green stimulus program worked – WaPo

#MintTheCoin
Meet the anonymous commenter who started the trillion-dollar coin meme – Wired

Alpha
It turns out that it’s actually quite hard to tell if Herbalife is (technically) a pyramid scheme – Steven Davidoff
“Have a shake, share an Aloe”: A great liveblog of the Herbalife conference – Will Alden

Compelling
The myth of Africa’s rise: Growth and development aren’t the same thing – Foreign Policy
Lagos and Nairobi are the new Tokyo or Frankfurt – Economist

The Oracle
Warren Buffett personally guarantees that the banks he has personally invested in are great – Bloomberg

Housing
Americans are finding themselves legally liable for homes they didn’t know they still owned – Reuters
Why home prices will rise slower than last year – Calculated Risk

Quotable
David Boies, master of groan-worthy, misleading analogies about AIG – Bloomberg

Charts
Who owns the US stock market? Households, mostly – Global Macro Monitor

Politicking
“Fix the Debt” media stars lobbied for special tax breaks and subsidies for their clients – Timothy Carney

Oxpeckers
Web “media companies are having to run faster and faster just to stay in the same place” – Mathew Ingram

Wonks
The Jack Lew signature generator – Yahoo

Time To Panic
The coming coffee apocalypse – The Awl

Sad But True
The end of football – Ta-Nehisi Coates

Regulations
New Basel rules are a “transfer from taxpayers to bank insiders and (perhaps) stockholders” – Simon Johnson

Well Put
“Lindsay Lohan moves through the Chateau Marmont as if she owns the place, but in a debtor-prison kind of way” – NYT

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Comments
5 comments so far

Can we get some kind of office pool going on this one? I don’t think it’s going to be Blackrock.

I would be willing to put some money on Citibank. He could follow in the footsteps of Orszag and his mentor Rubin.

Posted by f.fursty | Report as abusive

I’ll take the field vs. Citi, understanding that I’m not likely to get very good odds. I’d be surprised to see Geithner go to a SIFI because of all the negative publicity that would ensue. Yes, Orszag did so only 2 years ago, but Geithner is much higher profile than Orszag. Outside of rarefied circles, the necessary first step in getting people upset about Orszag’s move would have been telling people who Orszag is and what he did in the administration. That said, I’d love to see Geithner go to Goldman Sachs just to see Maxine Waters’ reaction.

Since taking the field isn’t an option in a pool, my pool pick is … Lazard.

Posted by realist50 | Report as abusive

http://www.ny.frb.org/newsevents/speeche s/2007/gei070323.html
Here’s what Timmy had to say back in 2007:
“The latest wave of credit market innovations has elicited SOME concerns about their implications for the stability of the financial system, concerns similar to those associated with earlier periods of rapid change in financial markets. Will the most recent credit market innovations amplify credit cycles, contributing to “excessive” lending in times of relative stability, and then magnify the contraction in credit that follows? Will they introduce greater volatility in financial markets? Will they create greater risk of systemic financial crisis?”
….
“By spreading risk more broadly, providing opportunities to manage and hedge risk, and making it possible to trade and price credit risk, credit market innovation should help make markets both more efficient and more resilient. They should help make markets better able to allocate capital to its highest return and better able to absorb stress. Broad, deep and well-functioning capital markets complemented by strong, well-capitalized banks, able to provide liquidity in times of strain, make for a more efficient financial system: one which contributes to better economic growth outcomes over time.”

The problem isn’t that he got it wrong – the problem is that in his spewing of these financial industry talking points, he NEVER stopped. He never stopped drinking the kool aid. Remember bonuses for AIG???

And yet it continues that people who proved that they don’t know anything about financial risk are made treasury secretary….
http://www.washingtonpost.com/business/e conomy/jack-lew-had-major-role-at-citigr oup-when-it-nearly-imploded/2013/01/10/a 913431e-5b6b-11e2-9fa9-5fbdc9530eb9_stor y.html?tid=pm_business_pop

is it a requirement of the job?

Posted by fresnodan | Report as abusive

“Geithner’s experience at the NY Fed made him a highly capable financial first-responder.”

Which is a nice way to gloss over the fact that his position at the NY Fed made him complicit in the creation of the conditions leading up to the collapse. (“I’ll help tie the woman to the tracks because later I will look good helping to clean up the mess!”)

I’ll not be sad to see him go–in fact I thought he should have been gone lone ago. Not that I’m holding my breath for anyone much better to replace him.

Posted by Moopheus | Report as abusive

Tim Geithner will be remembered for maintaining the old wall street order and status quo. Not only do we learn(this week in fact) that he leaked a 50 bps rate cut to BAC, but he famously said that the purpose of loan mods was to “foam the runway for the banks” just buying them enough time. He opposed going after the banks for fraud and did nothing to truly reform a broken system.

Posted by Sechel | Report as abusive
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