Where Was Geithner in Turmoil?
By
ANDREW ROSS SORKIN
Published: November 24, 2008
President-elect
Barack Obama unveiled on Monday an economic team with deep experience handling economic crises. But does the man at the center of this star-studded cast,
Timothy F. Geithner, the nominee for Treasury secretary, have what is needed to take the nation in a new financial direction?
That is what a number of Wall Street chieftains are quietly asking, even after the stock market surged with relief after his nomination.
One reason Mr. Obama gave for nominating Mr. Geithner was his ?unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency.? More important, he suggested, ?Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today?s markets ? and a clear vision of the steps we must take to revive them.?
Mr. Geithner is clearly a 47-year-old wonder boy.
A graduate of Dartmouth, he has a master?s degree from the
Johns Hopkins School of Advanced International Studies, did a turn with
Henry Kissinger?s consulting firm, a stint in the Clinton administration and, for the last five years, has been the president of the
Federal Reserve Bank of New York.
He will effectively lead the team Mr. Obama has chosen to mend a crippled economy. That?s important because they won?t just be debating economic theory ? they will be making deals Wall Street-style, negotiating billion-dollar bailouts and restructuring entire industries on behalf of their client, the taxpayers.
But Mr. Geithner?s involvement in several ultimately ill-fated efforts to buttress the American financial system is the very reason some Wall Street C.E.O.?s ? a number of whom spoke on the condition of anonymity for fear of piquing the man who regulates them ? question whether he?s up to the challenge.
?We have only two things to say about
Tim Geithner, who we do not know: A.I.G. and
Lehman Brothers,? said Christopher Whalen of Institutional Risk Analytics. ?Throw in the Bear Stearns/Maiden Lane fiasco for good measure,? he said.
?All of these ?rescues? are a disaster for the taxpayer, for the financial markets and also for the
Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion.?
Ouch.
?He was in the room at every turn of the crisis,? said another executive who participated in several such confidential meetings with Mr. Geithner. ?You can look at that both ways.?
While
Henry M. Paulson Jr., the current Treasury secretary, has taken a drubbing for the changeable nature of the government?s efforts to bolster the financial industry ? some of which clearly contradicted each other ? Mr. Geithner has managed, for the most part, to remain unscathed. He?s been widely praised as a bright, articulate out-of-the box thinker who is a bailout expert, to the extent anyone can truly be an expert at fast-changing emergencies.
Behind the scenes, Mr. Geithner was the point person for weeks of sleep-deprived Bailout Weekends. It was Mr. Geithner, not Mr. Paulson, for example, who put together the original rescue plan for the American International Group.
