May 23, 2014
Former Treasury Secretary Tim Geithner attempted to explain his side of the government's Wall Street bailout in his new book, Stress Test. Now that he's back in the press, many Democrats are still criticizing the way he handled the 2008 financial crisis, directly and indirectly. On her book tour, Sen. Elizabeth Warren has been repeating this line:
You know, you talked about during the financial crisis we were told these banks are too big to fail. Today, the five largest financial institutions are 38 percent bigger than they were back in 2008, when they were too big to fail."
What Politico's Ben White describes as the "quasi-official" liberal case against Geithner is what The Daily Show's Jon Stewart said to Geithner this week: "It felt like you took the [Wall Street] arsonists off the plane and then you got them a massage and a steak dinner." Geithner defends himself this way to Politico:
It was messy. It wasn’t perfect. And it seemed deeply unfair, because paradoxically, in a panic, to rescue people from the risk of mass unemployment, you’re going to be doing things that look like you’re helping the arsonists. It is just inescapable. And it feels terrible. And we hated doing it. But the alternative would have been much more unfair to the innocent victims of the crises.”
Geithner's legacy matters in that it is intertwined with President Obama's. Even though 2016 is years away, Democrats have already engaged in debate about Wall Street and financial policies, pitting progressive Warren against pro-business former Secretary of State Hillary Clinton. ProPublica's Jesse Eisinger, who shares a Pulitzer for his reporting on the financial crises, explains: "A lot of [the criticism of Geithner] is displaced dissatisfaction with Obama, who is so moderate and cautious and Geithner is obviously in that mold, only seeing the political limitations and being bound by unseen constraints."
The party will continue to argue about whether banks — and their wealthy top executives — were held to justice in the wake of the financial crisis. And the more progressive wing of the party will probably always think that Geithner's response wasn't, in his words, "Old Testament" enough, no matter how many books he writes.
Geithner is slowly making amends with some of his enemies, however. Former Treasury Secretary Larry Summers, who's criticized him in the past (and who Geithner criticized in Stress Test), told Politico this week, "If you look at the financial crisis that started all of this, our response looks very good compared with that of Europe, Japan or other historical episodes. Any fair-minded view has to give Tim great credit for that."
May 23, 2014