When Timothy Geithner Defied Barack Obama
Former Treasury Secretary Timothy Geithner. (Jose Luis Magana / AP)
Less than a week after The New York Times ran an op-ed by an anonymous Trump
administration official openly challenging the president's fitness for
office, the question of who wrote the piece continues to vex Beltway pundits
and the White House alike. But Donald Trump is hardly the first occupant of
the Oval Office to face insubordination, potentially from somebody in his
inner circle. As The New Republic's David Dayen reminds us, Timothy
Geithner's "refusal to obey his boss" altered the course of the Great
Recession-and likely set us on a path toward Trump's election.
In March 2009, the U.S. economy was imploding. Citigroup had reported losses
in excess of $8 billion the previous quarter, and two government bailouts
totaling $45 billion, along with an additional $306 billion in loan
guarantees, had proved insufficient to right the ship. While President
Barack Obama had publicly dismissed nationalizing the country's most
distressed banks, Larry Summer-then National Economic Council director-was
intrigued by the idea, so Obama ordered the Treasury Department to explore a
radical restructuring of Citigroup.
"Geithner simply didn't follow the request," writes Dayen, citing
"Confidence Men" author Ron Suskind. "It was a classic Washington move: When
your boss asks for something you don't like, just ignore it and hope that
the request isn't necessary when the boss follows up."
Geithner adamantly rejected this account, telling Suskind, "I don't
slow-walk the president on anything." But as Dayen notes, Obama tacitly
admitted that that was what happened, expressing his frustration with "the
speed with which the bureaucracy could exercise my decision."
"The Citibank incident, and others like it, reflected a more pernicious and
personal dilemma emerging from inside the administration," Suskind wrote at
the time, "that the young president's authority was being systematically
undermined or hedged by his seasoned advisers."
The rest is history. Using guarantees and Federal Reserve loans, Geithner
helped orchestrate a third bailout for Citigroup, and the bank avoided
anything even resembling a downsizing. Today, the former treasury secretary
heads a private equity firm that appears to specialize in scamming the poor.
From The New Republic:
"
Any objective look at Geithner's actions in response to the financial crisis
confirms that he would maximize his power on behalf of big banks, even if it
meant going around his colleagues and his president. That included paying
off AIG's investment bank counter-parties at 100 percent instead of forcing
a discount, or blocking [Sheila] Bair, the FDIC chair, from forcing higher
capital rules on banks. Every action fit Geithner's worldview: The financial
system must be stabilized at all costs, as the only way to heal the economy
so real people benefit.
Since the Great Recession kicked off 10 years ago this week, upward of $33
trillion in wealth has flowed to the top 10 percent, while the average net
worth of the bottom half of the country has dipped from $11,000 to $8,000. A
new report released by Public Citizen on Tuesday finds that the country's
five largest banks have raked in more than $580 billion during that time,
beneficiaries of a taxpayer-funded bailout, a trillion-dollar tax cut and
industrywide deregulation.
Overseeing it all is a far-right demagogue-an established birther and an
alleged sexual abuser whose political campaign centered on a pledge to
"drain the swamp."
Happy anniversary.
Read more at The New Republic.
Jacob Sugarman
