Gene Sperling is a stone-cold Pop-Tart thief. “At one point, Meg [McConnell, an adviser] noticed that a strawberry Pop-Tart she had bought from one of Treasury’s vending machines had vanished. She looked over at Gene [Sperling, then a counselor to Mr. Geithner], who shrugged and admitted he had eaten it. He said he would buy Meg another in a tone suggesting he comprehended neither the enormity of his crime nor the inadvisability of messing with Meg when she was tired and hungry.”
“’When, Gene?’ she demanded. ‘When are you going to get me another?’”
We also learned that the puppets of the ultra rich hired to put a face on these crimes are just a bunch of clowns……
via What We Learned From Tim Geithner’s Book – NYTimes.com.
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.”
Oh, and speaking of a lack of public speaking background? “I was supposed to do a few rehearsals to learn how to use the teleprompter, but I kept putting them off; I finally did a couple of halfhearted run-throughs that evening, repeatedly stopping to edit my text as I went along. I also had no time for prep sessions for my national TV appearances after the speech. … I did zero minutes of prep for the first TV interviews of my career.”
No wonder the stock market fell 500 points that day and speculation ran rampant that Mr. Geithner would be the first Obama cabinet member to be fired.
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. When articles about the idea were published in the run-up to the February speech, “the markets loved those articles,” Mr. Geithner writes, “because the government-run bad bank sounded like a way for Wall Street to dump its garbage on Uncle Sam at generous prices.”
Mr. Geithner’s staff had a subtle way to ascertain that it was Ms. Bair’s staff that was leaking these details: “My staff got so annoyed by the drumbeat of FDIC-planted stories that at one point they gave Sheila’s aides a harmless snippet of wrong information, just to see if it would end up in the media. It quickly did.”
He blames the negative reaction to the speech in part to FDIC leaks: “As bad as my speech and my delivery were, the reaction of the markets had a lot to do with their expectations, fueled by pre-speech leaks, that we would announce a bad bank to buy troubled assets at inflated prices.”
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.
When President-elect Obama called Mr. Geithner to ask if he would serve as Treasury secretary while Mr. Summers ran the council, “I immediately said I would, even though I knew it would mean more awkwardness.” Geithner added: “Some of our former colleagues thought the idea of Larry at the NEC bordered on lunacy. It was hard to imagine a former Treasury secretary in an advisory role. And the NEC director is supposed to be an honest broker … while Larry wasn’t known for sublimating his own views.”
The subtle tension continued during the transition period before the start of the Obama presidency. “Larry’s mantra in those days was ‘discontinuity,’ the importance of distinguishing the Obama response from the pre-Obama response. … But I didn’t like Larry’s frequent derision of Hank [Paulson] and Ben [Bernanke]; I was protective of them, and of course implicated in virtually everything they had done.” His critiques, Mr. Geithner continued, “weren’t entirely wrong, but Larry hadn’t been there, and I didn’t think he had earned the right to second-guess with that degree of confidence.”
And perhaps never was their relationship more tricky than the summer of 2009, when President Obama was deciding whether to appoint Mr. Summers to be Federal Reserve chair or to reappoint Mr. Bernanke. While Mr. Geithner doesn’t convey this decision with the drama he offers in other moments in the book, it is clear it was a difficult moment for all involved.
“I told the President I thought the current arrangement was working well, and I said this didn’t seem like a great time for a change at the Fed … When it became clear the president wanted continuity, Larry was disappointed, but I think he also recognized it wasn’t an ideal time for a change. He was tired, too, and he considered leaving the administration. But the President, Rahm [Emanuel], and I all leaned on him to stay, and he relented.”
He adds later in the book: “We had our differences during the crisis, and nothing was ever easy when he was around, but he was the most talented policy thinker I knew. I felt bad that the Fed chairmanship hadn’t worked out for him.”
It seems that Mr. Summers could see the writing on the wall for his possible Fed chairmanship. “The job would open up again in 2014, but when the President, on my recommendation, nominated my excellent former Fed colleague Janet Yellen to be vice chair in April 2010, Larry mused that she was certain to be the next Fed chair, because she would be too compelling a choice to pass over — another correct prediction.”
In the White House (as in life), there is a difference between real meetings and fake meetings. This chunk should be inserted in every book about public administration, or maybe management in general: “Meetings are life in Washington. Often they’re just for show, a way to suggest motion or commitment to an issue. Sometimes their main purpose is to make people feel included. But occasionally they’re the real thing, a forum for actual policy making. I got into the habit of walking into crowded meetings in Larry’s office and joking: ‘Is this a real meeting or a fake meeting?’ In other words, are we talking about a policy that requires a decision, or just talking? When it was a real meeting, I’d usually suggest that we skip the throat-clearing and fast-forward to the end of the PowerPoint deck so we could get to the debate about options. I wore my impatience too openly.”
He tried to make his pre-crisis speeches boring. In the years before the crisis, Mr. Geithner was president of the Federal Reserve Bank of New York, making him a key overseer of Wall Street. He saw many risks and frailties in the financial system in that role, some of which would prove prescient. But by his own telling, his efforts to draw attention to them were hardly the stuff of a public campaign.
“I did talk a lot about risks to the stability of the financial system, usually to financial audiences. … I didn’t seek media coverage, and I didn’t get any. But I did try to convey what I was learning about the strengths and weaknesses of the system, and to outline my hierarchy of concerns. In my careful, qualified, occasionally tortured way, I tried to lean against the wind.”
And, even more pointedly: “My speeches were never a model of clarity or hair-on-fire force. I was careful to express my concerns in understated, nuanced, deliberately dull language that wouldn’t move markets or depress confidence.”