Tag: Tim Geithner
"We've got eight years of disastrous economic policy. That's what we're going to change when I'm President of the United States." - candidate Barack Obama
Obama realized very early in the campaign that the economy was getting worse and decided to run on that issue: 'My opponent doesn't see it and I can fix it.' He had traveled to Wall Street to push for a change in its ways.
The Cooper Union speech had been Obama's message that we have to rein in Wall Street; resume more aggressive regulation. He was talking about regulation before anyone was talking about regulation, before the writing was on the wall. Austan Goolsbee remembers that the reaction was not great, "but to his credit, it did not keep him from laying it out."
"He was talking about the idea of making sure that the ethics of Wall Street was pure and that we were doing the business that we should be doing." - Robert Wolf, Chairman UBS Americas
The third segment of the Frontline series, Money, Power, and Wall Street begins at the end of the 2008 campaign. The economy was melting. The Bush administration was leaving. The inauguration was 76 days away. This was the most eventful and consequential Presidential transition in American history. In Chicago, President elect Obama watched the economy continue to collapse. Obama was getting a real glimpse of the future: disaster was coming. In those first weeks after the election, the entire economic team he had assembled was stunned by the bad news. They had been advising him for months, warning him. Meanwhile, there was really no one in the departing administration managing it. There was no political will; no one in charge.
"Larry Summers and I were both on the side of 'we need a more definitive clean-up of the financial system.' And the question was if somebody, you know, really wasn't solvent, do you need the government to put in capital, realize the losses, clean it up, and then put it back into private hands?" - Christina Romer, White House Economic Advisor 2009 - 2010
Any serious study of this administration's policies reveals a most pragmatic response by Obama at almost every turn. From the selection of Treasury Secretary Tim Geithner and many other establishment appointees, to the decision not to seize or take the banks to the woodshed, Obama has erred on the side of caution and market reassurance rather than a confrontation with forces that would flirt with a stalemate leading to economic stagnation or catastrophe. It is essential that the story be told clearly and that we rely on the accomplishments. That looks to be the approach the Obama campaign will employ based upon the message from the campaign thus far. The facts are more than embarrassing for the right's apologists.
This continuation of the Frontline documentary takes up with the events of 2008, a Presidential election year. In this installment, the very foundation of the financial world trembles while we meet the major players: Secretary of the Treasury Hank Paulson, Chairman of the Federal Reserve, Ben Bernanke, and Tim Geithner, president of the Federal Reserve Bank of New York.
Tim Geithner distinguished himself from the moment he received the first panicked call. Instead of acting without intelligence, he dispatched a team to survey the situation at Bear Stearns. They and teams from the SEC and JP Morgan discovered a drowning pool of toxic assets. Bear had made credit default swap deals worth trillions of dollars that had infected all of Wall Street and the financial world. Geither recognized the systemic risk to the world economy. This was the moment of realization that Bear Stearns was too big to fail. This took Federal regulators by surprise.