Geithner is trying to rewrite history in new book
What’s wrong with this picture?
Tim Geithner, the former US Treasury secretary and one-time head of the New York Federal Reserve Bank, wants to be seen as one of the guys who got the financial system out of trouble.
It wasn’t easy, he admits.
It wasn’t easy, he admits.
And it wasn’t always neat. In fact, you might even call it messy. And — oh, my! — Geithner suffered for his efforts. He’s still suffering today. And you’ll understand this more fully if you cough up $25 for his new book.
Tradition dictates that I give the book’s title and the publisher at this point. But I’m not going to. I don’t want to be responsible for even one extra copy of this book being sold.
So here’s what is wrong with the picture that Geithner is trying to sell: He doesn’t show his other face, the one that helped get America into all that trouble.
I have to admit that I haven’t read Geithner’s (Title Omitted), and I’m not planning to. It’s bad enough when people in public office try to rewrite history. But it is worse when they try to make money while torturing the public record.
New York has a Son of Sam Law that prevents criminals from benefiting financially from their misdeeds. Shouldn’t there be a moral code that restricts people — especially public officials like Geithner — from trying to benefit from their mistakes?
Even though I haven’t read (Title Omitted), Geithner was all over the place in the last few days giving interviews about his book and defending his record.
“People think we gave the banks this free gift of hundreds and hundreds of billions of dollars, using the taxpayers’ money that we would never see again. People thought we would lose $2 trillion on our financial rescue,” Geithner told a group of Harvard students.
The quote was picked up in a cover story in the Sunday New York Times magazine that has a photo of the “naturally boyish” Geithner on the cover. (Giggle, giggle.) “He looked hardly older than the teaching assistants in the front row,” cooed the Times.
Geithner’s point was that the US government made money on its deal with the banks — a couple hundred billion dollars. Wow! Why didn’t we give them more money?
But there’s something Geithner isn’t telling you. The risk-to-reward ratio of those bank deals was skewed tremendously to the risk side. And just to make sure the banks did okay, the Federal Reserve — through hook and quantitative easing — had to make sure interest rates remained infinitesimal.
In other words, the deal Geithner is now lauding required that interest rates remain unnaturally low for six years and counting. And those low rates cost American savers many, many times the amount of money the government made on its bank deals.
In short, American savers ended up subsidizing those bailouts through what was — and continues to be — a secret tax on their assets. Speak to that, Mr. Geithner and I’ll buy your lousy book!
But that’s not my only problem with Geithner, who concedes in the Times interview that even he felt ill-equipped for some of the jobs that were thrust upon him.
Geithner’s bio shows the progress of a guy who was in convenient jobs when big people — let’s call them Wall Streeters — needed a dupe.
He worked under five Treasury secretaries in all — both Democrats and Republicans. So Geithner was, in essence, an equal opportunity patsy.
In 2003, he became president of the New York Federal Reserve Bank. The president of that bank is a permanent voting member of the Fed’s Open Market Committee, which makes policy.
So Geithner is as guilty as anyone else — Fed chairmen Alan Greenspan and Ben Bernanke included — for keeping interest rates so low that a housing bubble developed when millions of unqualified buyers suddenly found their home loans approved.
Geithner wasn’t just cleaning up a mess after the financial crisis, he was cleaning up a mess that he helped make. It’s like BP wanting credit for getting all that goo out of the Gulf of Mexico after the spill.
You made the mess, now clean it up without bitching (or selling your story.)
The New York Fed is unique for another reason. It has the desk from which the Fed does all its trades. If the Fed wants to change the value of the US dollar compared with other currencies, the NY Fed does the job.
When Treasury wants to drain liquidity from the banking system, the NY Fed is on the case. Make liquidity more prevalent? You guess it, the NY Fed.
In other words, Geithner’s operation had to work very closely with Wall Street firms that were also trading. So it’s no wonder that Geithner once declared to Congress that he’d never been a regulator “for better or worse.”
Well, the NY Fed’s other job was to keep an eye on banks — to regulate them. That Geithner didn’t know this is even scarier than the fact that he got caught filing false tax returns and still eventually got the job as Treasury secretary.
All that trading experience came in handywhen Treasury Secretary Hank Paulson and his pals on Wall Street needed to rig the stock market in 2007-08. Geithner at the time was still heading the NY Fed and a year from taking over for Paulson.
In one five-hour period that started before the market opened on Sept. 18, 2008, for instance, Geithner either called or was called by Paulson six times. During the same time period, Paulson was also speed-dialing the heads of a number of well-connected Wall Street firms.
Geithner once admitted that during the financial crisis that Washington “was forced to do extraordinary things and, frankly, offensive things to help save the economy.”
I’ll give Geithner 25 bucks if he’ll spill on the “offensive things.” But I still won’t buy his book.
HOW CONFUSION OF LANGUAGE CAN LEAD US ASTRAY: We know, for example, that the Communists, and other hard leftists, co-opted terms and words in order to further their own ends. This article from Mises.org sheds some light on this phenomenon.
HOW CONFUSION OF LANGUAGE CAN LEAD US ASTRAY: We know, for example, that the Communists, and other hard leftists, co-opted terms and words in order to further their own ends. This article from Mises.org sheds some light on this phenomenon.
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