History will vindicate the former US treasury secretaryby Stephanie Flanders / June 19, 2014 / Leave a comment
Tim Geithner: One of his allies in Congress, Barney Frank, once told him that when he spoke in public, “he looked like he was at his own bar mitzvah.”
Public officials write memoirs for two reasons: to make money or to set the record straight. If there’s one thing that former US Treasury Secretary Tim Geithner would like readers of his new book, Stress Test, to know, it’s that his decision to plough hundreds of billions of taxpayer dollars into banks during the financial crisis was never about the money—and it was never just about the banks. His “only priorities,” he insists, were limiting the damage to ordinary Americans and to the broader global economy.
He first makes the point on page two and he’s still making it 527 pages later. I worked closely with Geithner during the 1990s at the US Treasury and I have no doubt he believes what he says is true. I also know that he has never worked for any bank. Unfortunately for him, I’m in the minority on both points.
It’s one of the running gags of Stress Test that most people think Geithner used to be a banker. Again and again, senior journalists, politicians and critics refer to his “previous career” at Goldman Sachs, despite continued efforts to set them straight.
He quotes one typical exchange, in early 2009, with a critical member of the Congressional Oversight Panel examining the administration’s plan for buying “toxic” bank assets: “‘Let me stop you right there,’ [Damon] Silvers said. ‘What I don’t get—and I practise law, and you’ve been in banking—is a deal—’
‘I’ve never actually been in banking,’ I interrupted.
‘Well, a long time ago,’ he said.
‘Actually, never,’ I replied.
‘Investment banking,’ Silvers retorted.
‘Never investment banking,’ I said…
‘Alright,’ Silvers conceded. ‘Very well then.’ And then he continued his attack on the Public-Private Investment Program as a shocking handout to financial interests.”
With so many ex-Goldman types in Washington—Geithner’s predecessor at the Treasury was a former Goldman CEO—the mistake is perhaps understandable. But lesson one of Stress Test is that Tim Geithner is not and never has been a banker. Some will say he is now making up for lost time, having taken a job for a leading private equity firm. But to me, that’s a bit different.
Another lesson, which comes through in…