Then on November 24, I wrote that the so-called necessity to bailout Citibank was largely the fault of Robert Rubin, as well as his "protege Tim Geithner, your soon-to-be Treasury Secretary," who "worked over the weekend with such luminaries as Hank Paulson & Ben Bernanke to let this latest boondoggle go down. More of the same . . . and lots more to come."
So why am I mentioning this? Mostly because a lot of people have been willfully naive, keeping themselves in the dark as to who Tim Geithner really is. Believing that since Obama picked him, he must be a good guy.
He was the head of the N.Y. Fed when it brokered last spring's sale of Bear Stearns to Morgan-Chase (read: he gave Morgan the money to buy Bear for pennies on the dollar). He played a key role in deciding not only to bail out AIG (which insured a large proportion of Goldman Sachs' trashy investments), but also to let Lehman go under, yet never felt the need to explain this inconsistency.
He's a tool of Wall St., he's always been a tool of Wall St., and from what we've seen in his short stint at Treasury, he will remain Wall St.'s biggest tool. From yesterday's NYT, discussing the back-room dealings that led to the announcement of Treasury's plans for all the bank's bad assets:
In sum, Geithner went to the mat, and won, in an effort to insure that Wall St.'s biggest will continue to receive our money, yet not be constrained in any way as to what they do with our money once they receive it. Of course. This is what Tim Geithner has spent his entire career doing.Mr. Geithner largely prevailed in opposing tougher conditions on that were sought by presidential aides, including David Axelrod, a senior adviser to the president, according to administration and Congressional officials. Mr. Geithner, who will announce the broad outlines of the plan on Tuesday, successfully fought against more severe limits on executive pay for companies receiving government aid. He resisted those who wanted to dictate how banks would spend their rescue money. And he prevailed over top administration aides who wanted to replace bank executives and wipe out shareholders at institutions receiving aid.* * *Abandoning any pretense about limiting the moral hazards at companies that made foolhardy investments, the plan also will not require shareholders of companies receiving significant assistance to lose most or all of their investment. Some officials had suggested that the next bailout phase not protect existing shareholders. (Shareholders at most banks that fail will continue to lose their investment.)Nor will the government announce any plans to replace the management of virtually any of the troubled institutions, despite arguments by some to oust current management at the most troubled banks.Finally, while the administration will urge banks to increase their lending, and possibly provide some incentives, it will not dictate to the banks how they should spend the billions of dollars in new government money.
And this is the man Obama tabbed to oversee his economic policies.
Tim Geithner is a very important man in the big picture for those who are really setting policy -- both inside D.C., and on Wall. St. That's why, unlike Daschle and Killefer, no one withdrew Geithner's nomination for failing to pay his taxes.