Monday, May 12, 2014

What Timothy Geithner Really Thinks

Geithner’s book, Stress Test: Reflections on Financial Crises, which Warren Buffett recommended, is available today. And for entertainment, read the 3 (as of this posting) Amazon reviews by people who obviously have not read the book.

To clarify his perspective on all of that “messiness and unpleasantness and awkwardness,” Geithner has spent the past year writing a book — “Stress Test: Reflections on Financial Crises” — that will be published on May 12. It is filled with revealing and sometimes gripping behind-the-scenes anecdotes. Geithner acknowledges for the first time, for instance, that he was initially at odds with Paulson and Bernanke over whether to bail out Lehman Brothers in advance of the famous weekend meeting in which they sought to find a solution before the firm collapsed. (“I sensed their advisers pulling them toward political expedience,” he writes, “trying to distance them from the unpalatable moves we had made and the even less palatable moves I thought we’d have to make soon.”)

Geithner also discloses that some members of the administration talked openly about nationalizing some banks like Citigroup. (“If you want to go in, you better be sure there are W.M.D.'s,” Lee Sachs, an assistant secretary of the Treasury, said during a meeting with Obama in the Roosevelt Room.) And Geithner discloses that he refused to fire Ken Lewis, the chief executive of Bank of America, who was near retirement. (“Tim, I’m trying to look out for you,” Geithner reports Gene Sperling, a counselor to him at the time, saying that he didn’t owe Lewis any favors. “If he’s going anyway, why don’t you push him out?”) He even concedes that he and Summers were initially opposed to the Volcker Rule, the widely popular regulation barring commercial banks from proprietary trading. His support, he writes, was “certainly political.”

But “Stress Test” is also surprisingly personal. Geithner confides that he actually didn’t want the Treasury job in the first place and that he tried on multiple occasions to resign, but Obama wouldn’t “liberate” him. He is also forthcoming — albeit in the somewhat unemotional language of the technocrat — about his own regrets. (“Before the crisis, I didn’t push for the Fed in Washington to strengthen the safeguards for banks, nor did I push for legislation in Congress to extend the safeguards to nonbanks,” he writes. “I wish we had expanded our housing programs earlier, to relieve more pain for homeowners.”)

Geithner likes to say that all the criticism and the second-guessing and the vitriol directed his way never got to him. “I try to pay no attention to that,” he told me over lunch one afternoon in New York. Almost indignantly, he added, “Our job was to fix it, not to make people like us.” Later, though, he softened and qualified the statement. “I’m human, and I like to be liked,” he said, “even if I didn’t expect to be liked in this.”