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If former Treasury Secretary Timothy F. Geithner has faced his share of criticism for his rocky tenure, Jesse Eisinger says, his new book makes clear that most of it should be borne by his old boss, President Obama.
Following up on his unsparing examination of the book, Stress Test, last week, Eisinger joins Steve Engelberg in the Storage Closet studio to expand on Obama’s missed opportunities in the wake of the financial crisis.
First off, Eisinger says, Obama went wrong in even appointing Geithner, who, as a former head of the New York Federal Reserve under President Bush, linked him politically to the status quo on financial regulation.
“I consider the Obama appointment of Geithner to be the single worst political mistake Obama made, simply for that reason,” Eisinger says. “They could’ve done everything that they wanted to do with the bailout but not tied themselves politically to it if they had simply had different personnel.”
And many widespread criticisms of the government’s recovery effort – questions about whether the bailout was too generous to the banks, for example, and how much critical flaws in housing policy were to blame – also point to Obama’s unwillingness to make sweeping change, even when it was needed. Given the chance to radically reshape the regulatory landscape, Obama disappoints, he says.
“They compete in the Obama administration to be the one who bows the longest and the deepest to political reality,” Eisinger says. “But I think that they significantly misread the moment of 2009.”
Engelberg agrees, recalling the widespread popular belief at the time that the financial system was out of control: “There was a series of voices that spoke out that said there would have to be changes – it would have to be akin to what happened after the Great Depression, when we did get a sort of generation of regulation and controls. That hasn’t happened.”
For their full conversation, listen to this podcast on SoundCloud, iTunes and Stitcher. Other resources from our financial coverage:
- Our reporting showing that as head of the New York Fed, Geithner missed clear signs of impending catastrophe before the financial crisis;
- Our series on the foreclosure crisis; and
- Eisinger’s reporting on the Volcker Rule.
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