NYT: Geithner And Summers "Have Played Central Roles" In Provoking Crisis

New York Times:

In various high-level government positions, Timothy Geithner, Mr. Obama's choice for Treasury secretary, and Lawrence Summers, his choice for director of the National Economic Council, each have demonstrated a capacity for good judgment and good ideas.

Both served in the Clinton Treasury Department -- Mr. Summers as secretary and deputy secretary and Mr. Geithner as a top aide -- where they won high marks for helping manage the fallout of that era's crises, including the Mexican peso devaluation, the Asian financial meltdown, the Russian bond default and the collapse of the hedge fund Long Term Capital Management.

Both men, however, have played central roles in policies that helped provoke today's financial crisis. Mr. Geithner, currently the president of the Federal Reserve Bank in New York, also has helped shape the Bush administration's erratic and often inscrutable responses to the current financial meltdown, up to and including this past weekend's multibillion-dollar bailout of Citigroup.

Read the whole story: New York Times

Comments

[Kate4Change]

Leave it up to some editorial from NYT to blame Geithner and Summers for the crisis. Were they involved in the Bush tax cuts? Were they involved in the oversight of these financial institutions and their fraudelent deals with homeowners? Were they responsible for the outrageous million dollar salaries and bonuses of the CEOs of these institutions? Were they responsible for the fraudelent reporting of these institutions books?

I wonder if they will blame Bush and Paulson for the success of the economy next year when Obama and his team climb us out of this disaster, or will he give credit to the ones that are actually making the decisions and managing the oversight.

I give credit where credit is due but it is ridiculous to blame others that were not managing or carrying out the decisions.

[sposton]

Read William Greider's latest piece:

http://www.thenation.com/doc/20081208/greider_web

[mcantwell]

I'm glad I don't pay to read the NYT.

[TXfemmom]

All the countries which lack regulation and controls are full of corruption and violation of investors' and public interest. Bush has attempted to make us into a third-world nation and bankrupt, all that Bin Laden ever wanted, and his supporters cheered him on while he was doing it.

[blowhard]

Like I once said, all these pseudo-sciences (including economics) are dangerous subjects. They always find a nice story to describe the past and dress it in math equations to give it a disguise of rigor. They have no predictive models!! Their predictive models always fail....and usually by the time the world finds out that the emperor has no clothes, these phony academics or charlatans have been awarded nobel prizes etc.

I have very little respect for so-called financial engineers, economists, shrinks and the like. On the contrary, I have a lot of respect for the arts, sciences and engineering. We should stop buying into the phony models and "theories" of economists and the other charlatans.

[Rule Of Law]

Think of Wall Street as a giant Casino. And Economics as a "system" devised to beat the odds. Now imagine that the players are also the Casino owners, all in on the deal and playing with your money. It's the ultimate "can't lose" scam.

[MadeinAmericaProud]

This is the best explanation I have read on this site. I have purchased a lot of books, I should have saved my money. My common sense told me the same thing you just said.

The companies you buy stock from send you a book (fancy name portfolio) about their company stock after you have purchased the stock through your 401K,.

The bottom-line, you send us the money but because of risk just breathing, you will not have 1 penny guaranteed to be returned.

All the market don't take because they were not feeling good that day( it is run by moods, news rumors etc), management fees eat up the rest. Insider trading in my opinion can be the only way people have been making money. Martha S. pi$$ssed someone off, that why she went to jail.

[bamilt0]

Pray tell, blowhard, what exactly SHOULD we be following then, eh?

[Choicelady]

If we do not immediately stop the process of deregulation and capitulation to free market fraud, we will continue to erode globally. Sorry it's not sexy and does not garner huge riches for the few, but a basic, self-sustaining economy is essential to national security. We do NOT need a housing market that has, a its primary goal, making fast bucks for owners. We need a housing market for homes in which to live. We need basic manufacturing as well as 'green' production and jobs that let people build skills. We need to believe in one another, not defer to corporate "experts" who sell us paper and make us think it's substantial. In other words, we need to keep the social policies of today (without the imperialism of global capital) coupled with an older base of production that meshes with the new. It is not only possible, it is desirable. Now - can these guys measure up to national needs rather than those of gluttonous corporations? Obama will have to keep them seriously in check. They can serve no master other than the American people.

[kymlosang]

very well put. i just dont trust timothy geithner nor do i trust summers. just like i didnt trust paulson. they are the only cabinet "picks" i was not too hyped on. seems like they were picked to please the markets. i hope not but dont trust the guys from the federal reserve. there is nothing "federal" about them except the name. federal reserve is a giant financial institution that is geared to make money and in this financial market, boy have they ever. they may be one of the few that have. thus my suspicions. that said, i like the mode of ethics you have just written. if we fail to grasp this basic concept that we need to dump the get rich schemes, and hold the few that are super rich to accountability, then i am not sure we will not recover. how can we? i imagine obama knows something about these guys he likes more than i do.

[Samalabear]

So sick of hearing partisan arguments -- the Dems did this, the Repubs did that. They all did a lot of damage. Reaganomics and trickle down and supply did did the most damage. The question is, this editorial points out, have these guys learned from their mistakes. All of Obama's appointments are people who have been in the system. I'm not sure there's any way to avoid that. They just can't have free rein, and they have to be answerable to the President and Congress. And hopefully people like Dodd, Pelosi and Frank have learned their lessons. They should be listening to people like Kucinich and Paul, the people who speak the truth and are marginalized again and again, and shouted down. And there's a lot that Americans can do, too. We showed what could be done in this campaign when we want change. Can't get complacent.

[Sumocat]

The end of the editorial reads: "Unlike President Bush, who ceded far too much power to his treasury secretary, Mr. Obama must challenge and question his advisers’ recommendations and decisions. He has chosen tough advisers. He must be even tougher than they are." -- To me, that is a most heartening analysis. Obama has struck me as an aggregate thinker, one who pulls together different, even competing, pieces of data and forms opinions from there. I believe he will ask the right questions to determine intelligent strategies. Intelligent, of course, does not mean flawless, but a logical course of decision-making enables one to correct their errors. This will be a refreshing change from a president who says "every war plan looks good on paper."

[momof3inGA]

Very true.

[harriscrl3]

Fortunately for them and us we have President that ask the Right Questions that surrounds himself with different perspectives that is the one that makes the decisions. A President with a progressive world view

Carol

[Bjarni]

Well on economics he's surrounded himself with Keynsian economists, so they will differ on how to get Big Government to boost the economy, and doesn't talk to those who want the market to be allowed to correct itself i.e. the Austrian School Economists (and no Greenspan was not an Austrian School Economist).

[harriscrl3]

At least they realize that Government has a role because Capitalism FAILED. We need to admit it. its the only way out of this mess

Carol

[Rule Of Law]

Hmmm, not really Keynsian---

And in April 2008, Summers proclaimed, “Any honest Democrat will admit that we are now all Friedmanites.” "Summers was a protege of the free market advocate Robert Rubin..." http://hidhist.wordpress.com/2008/11/08/against-larry-summers-the-friedmanite/

Rubin who led the charge to deregulate with the repeal of Glass Steagall and the passing of the Commodities act which took the rules off of derivatives--the very things that many say got us to this point. Rubin, Summers, Geithner, and Rahm Emmanuel (Clinton's bulldog on NAFTA) are all free market thinkers.

[SailFree]

"Progressive" is to real progress as "Lightning Bug" is to real lightning.
--Mark Twain

[noamjunior]

sailing free of logic?

[SailFree]

One notes it was President Bush who recognized the insolvency of the Fannie Mae loans and tried to institute regulations to reform the system as long ago as 2004-2005. And it was Obama's friend Raines, Barney Frank, and Chris Dodd among others who claimed the mortgages were good and reliable investments. Grasp the nettle firmly.

[momof3inGA]

NOT.

[momof3inGA]

All you need to do is flashback to LAST WEEK, when Bush continued to say that what we need is LESS regulation. He and his little friend Paulson are living in la-la land.

[noamjunior]

Fannie May has very little to do with the current situation- Its all about turning mortgage insurances into unregulated investments

[SailFree]

Well! This seems a rather determined effort to cover up the real culprits, the folks who brought us the mandatory insolvent lending regulations ( Carter, Cuomo, Clinton) and the people who covered up the insolvency (Raines, Frank, et al), and the people who obstructed the reformation of Fannie Mae and Freddie Mac (Frank, Dodd; et al) and the various levels of people who knowingly passed the insolvent mortgages through the various pipelines of the financial markets. The NY TImes becomes more despicable and less reliable by the day. NO wonder their sales are falling...

[Bjarni]

All those people are criminals who were creating wealth out of nothing selling it off as valuable paper, and their co-conspiritors who shielded them from being critisized.
But don't forget Greenspan, Bernanke and Paulson, all people who were spewing propaganda until July that the markets were sound giving people a false sense of security to buy impaired assets. I look at them as a used car salesman who sells lemons to people.

[joebaggadonuts]

While he has picked on some pretty smart people, it wouldn't hurt to add a role for Krugman, the recent Nobel Prize winner.

[Kate4Change]

Krugman doesn't want to be in government.