The Opposition…

Stress Test: Reflections on Financial Crises

Timothy F. Geithner

Discussion: 2014-Apr-May-Jun

Why we're reading this: May 21, 2014
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2014-Apr-May-Jun

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* June 2014
By Tiffany , WristStrong · 1 post · 26 views

last updated Jul 01, 2014 01:25AM

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By Tiffany , WristStrong · 1 post · 28 views

last updated May 27, 2014 05:54PM

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Jan 01, 2015 Jack rated it really liked it · review of another edition

Shelves: politics, presidents, nonfiction, biography

This is probably as readable a book by a treasury secretary that can be written. IF one wants to read an insider account of the financial catastrophe, the only other person who deserves to be listened to as much as Geithner is Ben Bernanke. Both Geithner and Bernanke were there when the financial system collapsed, and they were both there as it made serious strides toward recovery. I am not sure how much they should be credited or blamed for all that went right and wrong, but they were there for This is probably as readable a book by a treasury secretary that can be written. IF one wants to read an insider account of the financial catastrophe, the only other person who deserves to be listened to as much as Geithner is Ben Bernanke. Both Geithner and Bernanke were there when the financial system collapsed, and they were both there as it made serious strides toward recovery. I am not sure how much they should be credited or blamed for all that went right and wrong, but they were there for it all. Geithner first worked at the NY Fed, the main entity in dealing with the Wall Street collapse, and he worked closely and well with then-Treasury Secretary Paulson and Bernanke. Then President Obama appointed Geithner as Paulson's successor.
Geithner makes some very important points in this book.
1) He pissed off conservatives and liberals, which is probably why I like him. As he noted a few times, conservatives felt that he was a socialist trying to take over the free market, and liberals believed he was a lackey of the Wall Street titans who drove our economy over the cliff. In fact, so many people mistakenly believed that he worked in banking and finance before working for the US government. He continually had to correct people that he never worked in the private sector of banking or finance up to that point.
2) Bernanke has said, "There are no atheists in foxholes, and no ideologues in financial crises." I believe that is incredibly smart. Geithner, Bernanke, and Paulson were not approaching the financial catastrophe as liberals or conservatives: they approached the collapse as crisis managers, or firefighters dealing with a four alarm blaze. Their responses were not in response to questions like "is this pro-market" or "conservative" or "liberal," their responses were along the lines of "will this work?" The idea that they were interested in saving Wall Street but not Main Street, according to Geithner, was silly. They believed that if they let Wall Street burn, there would be no more Main Street. And where others constantly wondered if Geithner was creating moral hazard by helping bad players, rather than letting them pay for their mistakes, Geithner felt that the pain felt by bad decisions would be most harshly felt by EVERYONE if he did not act. As he quoted President Obama, "Do we not build fire houses because we're afraid of the moral hazard created by their existence?" (Paraphrase, really.) I can't speak with pure conviction on all of this, but I am inclined to think that Geithner, Bernanke, and Paulson were more right than wrong, and I'm very thankful that Presidents Bush and Obama had the wisdom to listen to them. Bush's last two years and Obama's stewardship in dealing with the economy, I think, will stand as monuments to great leadership in dealing with the crisis, particularly when they both dealt with LOTS of opposition on this issue.
3) Even though I'm not entirely sure how right Geithner is, I do know that those who felt he was incredibly wrong are increasingly being PROVEN wrong. (Proving someone is wrong is much easier than proving someone is right.) As I write this, the economy is doing MUCH better (if not great), the unemployment rate is improving, and the deficit is decreasing MASSIVELY. IF Obama and Geithner were wrong, things would be getting worse now, but they're getting BETTER. Look at it another way: if Gov. Romney won the 2012 presidential election, he would be pointing to recent economic data as proof that his policies were working. To deny that point is to be 100% dishonest. It's entirely possible that our economy will take another negative turn in the near or less-than-distant future, and we can then reevaluate Geithner's assumptions. All I can say is that AT THIS MOMENT, he looks pretty good, and his conservative and liberal critics look less pretty bad. Considering how horrible the economy was just a few years ago, and realizing where we are now, that's one hell of an accomplishment. Hopefully it stands, for the sake of ALL Americans. ...more

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