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Jobs Watch: Why sacrifice Geithner?

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Ben Jacklet
Friday, November 20, 2009
Like Peter DeFazio, I’m no economist. And I have some serious questions about some of the ways our public money has been spent in the name of rescuing the economy. But I completely disagree with DeFazio’s call for the resignation of Treasury Secretary Timothy Geithner.

DeFazio, the hard-nosed veteran Democrat from Springfield, offered up his view that Geithner should be fired during an interview Thursday with the Wall Street Journal. His reasoning: “All the gambling on Wall Street is doing nothing to put people back to work in America and rebuild our economy.” This made immediate news because a lot of people, myself included, are fed up with hearing about how well the economy is recovering while the nation — and Oregon — continue to lose jobs.

But let’s pause for a minute and consider what Geithner inherited, and where we stand today. I don’t know about you, but I had a strong case of economic doom one year ago. Between the headlines oozing out from the Lehman collapse and the AIG “rescue,” and the impending potential collapse of Fannie Mae, Freddie Mac, Bank of America and Citigroup, I was losing faith in the financial system. I don’t have that feeling today. The markets are coming back and Oregon’s unemployment rate is finally easing back down, albeit painfully slowly.

DeFazio’s central argument that Geithner’s actions have focused too much on Wall Street and not enough on regular people is understandable. I can see how it would be an easy postion to take, as a liberal from Oregon. It is certainly frustrating, for example, to listen to Oregon’s top economists (many of whom insisted early on that the recession would largely bypass Oregon) tell us today that the recession has passed – never mind the continued job losses.

But think about the root of the problem: Wall Street. If the goal is to fix or at least improve a financial system prone to inflating with greed and exploding with busts, wouldn’t you want someone in charge of fixing the problem who understands this stuff deeply? Geithner was in the room when the government pulled the plug on Lehman, and he fought like hell to prevent that because he understood the consequences. He also helped arrange the shotgun marriage between JP Morgan and Bear Stearns. And he has been the principal architect of an elaborate recovery plan that, for all of its myriad failures, is ultimately succeeding.

Has the Administration been too soft on Wall Street? It’s an understandable first impression, but once mighty (now or soon to be unemployed) banking barons such as Richard Fuld, Jimmy Cayne and Kenneth Lewis might see it differently. As for the idea that the Treasury Secretary is some kind of a patsy, here is how a quote from a highly recommended New Yorker article by Ryan Lizz, describing how Geithner rose through the ranks of the Clinton Administration:
The way Tim came up through Treasury is that he was the only one who would tell (Lawrence) Summers he was full of shit or that an idea was stupid.

Anyone remotely familiar with the intellectual capacity of Lawrence Summers will recognize the significance of that statement.

The day after Geithner gave his first major speech as Treasury Secretary, the Dow crashed 382 points. How did Geithner recover from his position as the “first human sacrifice” of the Obama Administration? He worked his butt off. He came up with the idea of forcing the banks to undergo stress tests, and he stood up to Summers (who had doubts about the ability of regulators to conduct those tests) and Paul Krugman and other leading economists who were calling for nationalizing banks. It was a tough position to take, but in the end it worked. Most banks have recovered (sort of) by raising private money instead of siphoning even more public money. Are there any taxpayers out there who really wish the federal government owned Bank of America and Citigroup right now? If so, I’d like to hear your reasoning.

I guess in the end my position on Geithner is similar to my position on Portland Mayor Sam Adams. Yes, he’s flawed, but he earned the job, he's smart as hell, he means well and he is working with a sense of purpose to make things better. Running him out of office would be a mistake and a major distraction from the important work that remains undone.

At least that's what I think I think. What do you think?

Ben Jacklet is managing editor of Oregon Business.



acid tongue
0 #1 Geithner = Sam Adams?acid tongue 2009-11-20 12:16:39
You say you think Geithner should stay because, like Sam Adams, he has earned the job. So intentionally lying to the public to cover up an issue that you believe would keep you from being elected equal earning the job. Sam Adams has not earned his position. He side-stepped the political process so he would make sure he would be elected. Those are his own words. Whether he is smart as hell and means well is irrelevant to the issue. Giving both these guys a pass on their previous conduct just because they are intelligent produces a flawed result and sets a horrible precedent for future elected officials. We deserve better.
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0 #2 Hey BenJoe 2009-11-20 13:09:40
STOP with the what he inherited bit! This is this administration' s problem, their overspending, their stimulus, their deficit. Wake up. Approval rating below 50% IN LESS THAN A YEAR. We have a right to be mad. He is a tax crook, a manipulator of facts, and you only can blame the past for so long.
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0 #3 Geitner doesn't know what he's doing!JudyinWash 2009-11-20 13:25:46
Or maybe he does. The Federal Reserve is a PRIVATE CORPORATION that has NO connection to the govenment, even though Congress wants you to think it does. It has no rules nor regulations, it controls and inflates whenever it wants.
Just the word "interest" was created out of thin air - a bookkeeping entry. It's as false as the IRS!
Abolish the Federal Reserve and Geitner!
HR-1207 and S-604 bills!!!
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John A. Ward
0 #4 GeithnerJohn A. Ward 2009-11-20 15:00:20
Geitnner was a part of the problem in the beginning, he worked in the regulatory position in New York. He has 'saved' his buddies that BET on derivatives and used the money that was produced to clean up the 'toxic assets' that were supposed to be the problem. So an insider help out his insider buddies and we get left holding the bag, sounds familiar. By the way the Bush administration gave an interview months before the financial crisis about the impending Freddie & Fanine and inflated housing market, too bad nobody listened particularly the Democrats in Congress that chaired all the committees in congres.
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0 #5 the problem is inherited...JCH 2009-11-21 14:13:55
Wishful to think otherwise, but the credit crisis happened on Bush's watch, and, in large part, was caused by Bush policies.

As for Geithner, he has proven his early critics wrong, and in spades; in fact, that is one reason why the noise about him has gotten so loud. Some men with very big egos staked their reputations that Geithner was a deer in the headlights - a weakling with abysmal policies. He has stomped them, and rather than admit their defeat, they have gone from shouting to screeching.

And DeFazio is one of them.
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