The New Yorker has a great piece on how Timothy Geithners policy recommendations “saved” the economy… at least the fortunes and futures of the 4 big banks. For the rest of us… I’m not so sure… interesting read.
“When President Obama came to office, the Bush Administration had already committed two hundred and thirty billion dollars of taxpayers’ money to big banks—a policy that Geithner, as president of the New York Federal Reserve Bank, helped to enact. During the transition, he warned the incoming President that more “repugnant” actions would be necessary to shore up the financial system and restore economic growth. (In the first three months of 2009, G.D.P. declined at an annual rate of 6.4 per cent.) “We knew it would be politically costly, but not nearly as costly as if we hadn’t got it right,” Geithner said to me of the financial stabilization plan. “And we didn’t think we had other options available that were credible.”
“Geithner seemed exasperated by these critiques, and by the idea that the Democrats were now viewed in some quarters as beholden to business interests. “I don’t think the Democratic Party is seen as the party of Wall Street,” he said. “I think there are some in the Democratic Party that think Tim and Larry are too conservative for them and that the President is too receptive to our advice.” The reality, Geithner insisted, was that the Obama Administration had given just seven billion dollars to banks—mostly small and midsize banks, not big Wall Street firms—and it had proposed the biggest regulatory overhaul in seventy-five years. “Some on the left have fallen into a trap set by the Republicans, allowing voters to mistakenly think that the biggest part of the bank bailout had come under Obama rather than Bush,” Geithner said. He suggested that his critics draw up a balance sheet comparing the Administration’s expenditures on programs that benefitted Wall Street with those that benefitted Main Street. “By any measure, the Main Street stuff dwarfs the Wall Street stuff. Compare money for housing versus money for banks. Measure tax cuts for working families versus money for banks.”
“Geithner’s figures are accurate. But he and the Administration have failed to persuade the public. For whatever reason, a large chunk of the population—from liberal Democrats to right-wing Tea Party activists—does indeed believe that people who used to work for Wall Street firms, particularly Goldman Sachs, run the Administration. At Capitol Hill hearings and other public events, Geithner himself, who has been a public servant for almost his entire career and has never worked on Wall Street, has sometimes been identified as a former investment banker.”