Geithner gets an F on his stress test.

I have not read Tim Geithner's memoir of the crash, Stress Test. [I did read Hank Paulson's memoir of the crash - and discovered that we shared three things in common - birding, residence in Barrington IL (I lived there once, a long time ago) and a love of the boundary waters near Ely MN. Otherwise, Paulson and I do not see eye-to-eye on much, particularly on his handling of the bailout.]

I don't know if I will read Geithner's book. It is well-written, says Michael Lewis (author of Liar's Poker) in a NY Times review. But as I read Lewis's review, I wanted to throw the book at a wall - and I don't even own the book. Lewis quotes Geithner as saying:
"We did save the economy, but we lost the country doing it..." 
(My God! Is the economy "saved"? Not in my neck of the woods! But the country was indeed lost as a result of the crash.)

Lewis goes on to say:

"Geithner seems genuinely to believe that the details of the behavior inside the financial industry are largely irrelevant — that investors who bought subprime mortgage bonds simply suffered from the same misconceptions as everyone else. But he doesn’t begin to explain why, if investors were so numb to risk, Wall Street went to such lengths to disguise that risk. Why did our financiers stuff so many bad loans into incomprehensibly complex securities that even sophisticated investors were unlikely to understand, and then pressure deeply conflicted ratings agencies to declare them risk-free?"
I can only imagine why the banks hid the risk of their activites, and it was not out of ignorance or stupidity. They knew what they were doing, and they were blessed by a US government seemingly uninterested in holding them accountable for egregious failures. For Geithner, holding bankers accountable is apparently some kind of "Old Testament vengeance" rather than the normal course of action when people screw up as spectacularly as bankers did.

Apparently Repo 105 and over-leveraging one's business and betting against the US housing market (there's no place like home if you're a Goldman Sachs banker looking to pad the bonus) are standard business practices we should continue to encourage. And funneling billions and billions and billions of dollars to bankers was the ONLY way to solve the issues of the financial sector (Geithner seems unaware that there was an economy outside of Wall Street, an economy that has ramped up to putter-speed right now, more than a half decade after the crash.)

Geithner spent time on the Daily Show this week, listening to Jon Stewart talk about the book. Stewart devoted quite a bit of time to talking about the book to Geithner - here's part 1, part 2, part 3, part 4 and part 5 of the interview. You'll see if you watch the segments, that Geithner, former Treasury Secretary, could barely get a word in edgewise.

And that's the problem with Geithner.
The man Obama put in charge of hauling the nation out of the abyss is not very assertive. Michael Lewis notes this in his review of the book, pulling a quote from Geithner about this very issue:
“'I had always been a backstage guy,' Geithner writes by way of general explanation, but referring specifically to his first, spectacularly unsuccessful, public speech as Treasury secretary. 'I had spent my career behind the scenes. Ever since high school, I had dreaded public speaking. . . . I swayed back and forth, like an unhappy passenger on an unsteady ship. I kept peering around the teleprompter to look directly at the audience, which apparently made me look shifty; one commentator said I looked like a shoplifter. My voice wavered. I tried to sound forceful, but I just sounded like someone trying to sound forceful.'”
As Geithner acknowledges, the former head of the US Treasury Department, a man who needed to shove the US economy out of its catastrophic free-fall into forward gear, the man charged with jump-starting a near-dead economy, was a failure at being forceful.

When Geithner does talk in the Daily Show interview, he sounds really wishy-washy. Worse, his spectacular blind spot is revealed over and over and over. In Geithner's world, bankers are good guys who got caught up in a bad thing. It's excruciating to watch - at least, I found the interview to be excruciating to watch. Geithner kept claiming that the bank rescue prevented the terrible downturn from being worse. Stewart kept prodding Geithner to explain why bankers got bailed out and consumers got left holding the bag. "The bankers paid back their loans! America reaped the benefits of this investment! The economy was saved, though the country was lost!"

In reading/viewing all the publicity over Geithner's Stress Test, I realized this: Obama put a lamb up to defend the nation against bulls and lions - and guess what? We all got eaten by those who like to eat what they kill. Not the change we were looking for back in 2008....


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