What We Learned From Tim Geithner’s Book

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from The New York Times,

Timothy Geithner’s new book, “Stress Test,” runs 580 pages and covers countless moments of crisis and fear during his time as New York Fed president and Treasury secretary. Read our colleague Andrew Ross Sorkin’s magazine article on Mr. Geithner and the book for more on the broad themes it recounts. But in the meantime, here are a few smaller chunks that we found particularly revelatory.

Geithner was aware of — and worried about — the gravitas gap. Seemingly every profile written about him has noted that he has a boyish look about him (as Vogue memorably put it, “the kind of looks that can go either way: Half an inch one way he’s John F. Kennedy; half an inch the other he’s Lyle Lovett”). As it turns out, Mr. Geithner himself considered his youthful appearance to be a weakness in his potential candidacy for Treasury secretary, along with his lack of experience in more public-facing roles. “In a period of turmoil and uncertainty, the public would want to see a familiar and reassuring face in charge of the country’s finances,” he recalled telling Senator Barack Obama in 2008 in their first meeting when the role was discussed. “I had spent my career in obscurity, and I didn’t think of myself as a reassuring presence. I looked young. I had never appeared on TV.”

That first foray into the public spotlight was every bit as disastrous as it seemed. Mr. Geithner’s first major speech, in February 2009, was billed as the rollout of the Obama administration’s plan to end the financial crisis. It was a debacle on every level, and from Mr. Geithner’s account it seems he and his staff could see it coming like a slow-motion car crash. After settling on Feb. 10 to roll out the administration’s plan, the Geithner aide Meg McConnell noted, “But we don’t have a plan.” Indeed. “The run-up to my speech was horribly tense,” Mr. Geithner writes. “White House staff wanted the speech to reassure the public by emphasizing our determination to get tough on Wall Street and save taxpayer dollars. My Treasury team wanted to reassure the markets by emphasizing our determination to do whatever it took to prevent more bank failures. The results were predictably schizophrenic.”

But it may have been partly Sheila Bair’s fault. During that time, Mr. Geithner was deeply irritated by what he saw as the Federal Deposit Insurance Corporation chairwoman Sheila Bair’s flawed proposal to deal with the crisis — and even more so by leaks he attributed to Bair’s staff. Ms. Bair, who wrote a book of her own that is sharply critical of Mr. Geithner, proposed a plan for a “bad bank” that would buy up many of the crummy assets clogging the books of major banks.

Geithner’s relationship with Larry Summers is really complicated. Back in the 1990s, Larry Summers promoted Mr. Geithner, a young Treasury career staffer, into a series of roles that launched his career at the highest levels of economic policy. It is clear from the book that the two men have a close, intertwined, yet fraught relationship. Mr. Summers was essentially passed over for Treasury secretary at the start of the Obama administration in favor of his protégé, placed instead as the less prestigious head of the White House national economic council.

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