Tim Geithner — the man at the center of the whole financial crisis and alleged recovery — finally talks.
As NY Fed chief in 2008 and Treasury secretary in 2009 and onward, Geithner was in the room during those fateful weekend meetings to scuttle Lehman Bros., to cajole Jamie Dimon to buy WaMu after buying Bear Stearns, and to hitch a weakened Merrill Lynch with Bank of America.
In an astonishing admission, Geithner writes that he met with former President Bill Clinton, looking for advice on how to seem more of a populist.
Big Bill’s joking response? “You could take [Goldman Sachs CEO] Lloyd Blankfein into a dark alley and slit his throat and it would satisfy them for about two days. Then the blood lust would rise again,” Geithner writes in his new book, “Stress Test: Reflections on the Financial Crises,” according to a report on the book.
The boyish, bumbling Geithner, 52, left his post last year after President Obama finally accepted one of his many requests to resign. During his tenure, he was among the most disliked people in Washington.
In his book, Geithner reveals that some in the White House had been serious about nationalizing banks like Citigroup, a maneuver that was ultimately rejected.
He also contends that the bank bailout was ultimately a success, even though it was wildly unpopular.
Here are some other revelations from “Stress Test”:
- He regrets not being tougher on the banks. “It’s clear we didn’t do enough,” Geithner writes. Specifically, he could have done more to keep people in their homes or push for tougher laws on the banks.
- He admits he initially had a pie-in-the-sky view of Wall Street honchos. His exposure to banking’s superstars gave him “an impression that the US financial sector was more capable and ethical than it really was.”
- Geithner refused to condemn banker bonuses in January 2009, deep into the worst months of the recession. At a press conference, he stayed silent as Obama expressed outrage for the both of them.
- Even though Geithner first led the charge to let Lehman fail, he wanted a carrot-and-stick approach to the rest of the money-starved lenders in case they wanted to buy Lehman.
Geithner went on about Lehman, knowing that he and the former bond house would be linked forever.
Lehman was starting to teeter. It had borrowed about $31 for every dollar it had invested, and nobody wanted to lend any more.
In Washington, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke were in favor of bailing out the doomed bank. But Geithner thought they had to let the bank collapse.
“I sensed [Paulson’s and Bernanke’s] advisers pulling them toward political expedience, trying to distance them from the unpalatable moves we had made and the even less palatable moves I thought we’d have to make soon,” Geithner writes.
Geithner is now a partner at the private equity firm Warburg Pincus.
“Stress Test” is out May 12 through Crown Publishing.