On the face of it, the lengthy Tim Geithner profile in today’s New York Times is not quite as unflattering as last Friday’s cover story in Portfolio — but it’s pretty close. Both perpetuate a slightly altered narrative about the Treasury Secretary: where earlier hit jobs depicted Geithner as a limp-wristed bureaucrat who took marching orders from the plutocrats who appointed him to head the New York Fed, the latest stories further the notion of Geithner as precocious, fundamentally unprepared child — a sort of Sarah Palin of Clinton-anointed technocrats. A structured finance expert accuses him of “magical thinking” in the Times; Portfolio quotes Mike Barnicle’s “eyes of a shoplifter” observation. “Think Bambi looking into the headlights on an 18-wheeler,” says one economist of Geithner’s fumbling through a question-and-answer session in 2006. “People thought, ‘Whoa, that’s kind of out there,’” says comptroller of the currency John C. Dugan of a short-lived proposal Geithner advanced last June to guarantee all bank debt. Management expert Peter Cohan suggests Geithner is flailing because he isn’t very “good at math.”
Between the lines of both stories, tough, are some more tangibly problematic signs for Geithner’s future in the post.
First and foremost, former Citigroup chairman Sandy Weill formally admits to the Times that Geithner was up for the bank’s CEO spot in November 2007 — a month Geithner looks to have had six meetings with the zombie bank. After he turned down the spot, he supposedly “recused” himself from official Citigroup business — and yet a timeline of Geithner’s calendar pieced together by the Washington Post and Pro Publica shows he had two dozen meetings with the bank over the next year.
Another morsel the Times digs up is Geithner’s aggressive lobbying in May 2007 to allow banks to reduce their capital requirements. Derivatives, he argued in a May 15 speech at the Atlanta Fed, enabled banks to sufficiently hedge risks that capital requirements were unnecessary — something FDIC Chairman Sheila Bair worried would leave taxpayers “holding the bag.”
The Portfolio piece describes a bizarre moment during which former FDIC chairman Bill Seidman incurred the wrath of Geithner after disputing some contentions then-Treasury Secretary Larry Summers made about the banking system in Japan, where Seidman had been closely observing bank reform in his capacity as a Morgan Stanley strategist. Seidman tells Portfolio that after he dismissed as “irrelevant” some of Summers’ statements about Japan, Geithner accused him of being a “disloyal American. You can’t make statements like that on foreign soil about a secretary of the Treasury.”
Seidman, who was awarded the Bronze Star for his service in the U.S. Navy during World War II, wasn’t accustomed to having his loyalty questioned, certainly not by someone approximately 40 years his junior. “I said, ‘Where does it say that in the Constitution?’ ” Seidman tells me.
Geithner is learning that lesson the hard way: as Portfolio reports, nearly all his old loyalists — namely former Fed chairman Paul Volcker, the just-sacked former Merrill Lynch CEO John Thain, former New York Fed chief Gerald Corrigan — refused to grant interviews for the story. And todayanother big Geithner loyalist, prolific Wall Street lawyer H. Rodgin “Rodge” Cohen, seems to have cooled on the guy. Just weeks ago Cohen was in line to become Geithner’s deputy; and after abruptly pulling out of the process for what observers assumed was reluctance to submit himself to the vetting process Cohen told an audience in his native West Virginia that Geithner “has got it exactly right.” Today, though, Cohen’s sentiments seem decidedly lukewarm: the Times quotes him saying Geithner was the regulator most willing to “push the envelope” to save the system.
Geithner’s remaining defenders are few: bearish economist Nouriel “Dr. Doom” Roubini defends his intentions, Ben Bernanke praises his connections on Wall Street and Ralph Schlosstein, the founder of the hedge fund BlackRock, applauds his neutrality. (Um, yeah: BlackRock just won three no-bid contracts to oversee troubled assets acquired by Treasury in the various bailouts.) Peter Fisher, the BlackRock executive who recently gave a wry interview crediting exploitation of the AIG bailout for the banks’ astonishing swing to profitability in the quarter, was not quoted.