Geithner Gets 'Existential' On Financial Reform
What a difference a year makes.
Treasury Secretary Timothy Geithner, according to Noam Scheiber in New Republic, has completed his journey from "the administration's most controversy-prone member" to the "surprising survivor" of Obama's economic team. (In a recent New York Times profile, Geithner was called the the administration's economic "anchor."
Geithner is taking the lead on many of the administration's foremost financial agendas: reforming Fannie and Freddie, pressuring Republicans to raise the debt limit, and rewriting corporate tax rules.
But Noam Scheiber's lengthy new profile of Geithner suggests he won't be the man to drastically transform the financial landscape in the hopes of preventing future financial crises.
When Scheiber asked Geithner if he had "vision for the postcrisis landscape--for, say, a less bloated financial sector with a smaller role in the economy--and a map for how to get there" Geithner response was: "We're going, like, existential." Then he laid out his thoughts on financial regulation:
"I don't have any enthusiasm for ... trying to shrink the relative importance of the financial system in our economy as a test of reform, because we have to think about the fact that we operate in the broader world," he said. "It's the same thing for Microsoft or anything else. We want U.S. firms to benefit from that." He continued: "Now financial firms are different because of the risk, but you can contain that through regulation." This was the purpose of the recent financial reform, he said. In effect, Geithner was arguing that we should be as comfortable linking the fate of our economy to Wall Street as to automakers or Silicon Valley.
One can disagree with this substantively. Financial reform is a good start, with its stricter rules and new authority for regulators. But whether Wall Street can be made to behave like a normal industry rather than a source of economy-wide instability remains very much open to debate."
Geithner's perspective here does not bode well for the end of "too big to fail" financial firms. As the Huffington Post's Shahien Nasiripour reported in January, trillion dollar banks could actually get bigger under the administration's financial overhaul law.
In documents revealed by the Financial Crisis Inquiry Commission last week, it was revealed that legendary investor Warren Buffett told the panel that it could never fix the problem of "too big to fail."
Read the full profile of Geithner at the New Republic.