Geithner, as Member and Overseer, Forged Ties to Finance Club - NYTimes

8/14/2019 Geithner, as Member and Overseer, Forged Ties to Finance Club - NYTimes

1/5

Page 1Geithner, as Member and Overseer, Forged Ties to Finance Club - NYTimes.com

09-04-27 15:04:42http://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r= 1&hp

Search Business

News, Stocks, Funds, Companies

Financial Tools

Select a Financial Tool

Global

Business

Market

s

Economy DealBook Media &

Advertisin

g

Small

Business

Your

Mone

y

Energy &

Environmen

t

More in Business

Enlarge This Image

LibradoRomero/The NewYorkTimes

Treasury Secretary Timothy F.Geithner in in his Manhattan office inFebruary 2007, when he waspresident of the New York FederalReserve Board.

Multimedia

Document File: Geithners

Calendar at the New York Fed

An examination of Timothy F.

Geithners schedules from his

time as president of the NewYork Fed offers a rich account of

the people and forces that

shaped his thinking and action.

Geithner, as Member and Overseer, Forged Ties to FinanceClubBy JO BECKER and GRETCHEN MORGENSON

Published: April 26, 2009

Last June, with a financial hurricane gathering force, Treasury Secretary

Henry M. Paulson Jr. convened the nations economic stewards for a

brainstorming session. What emergency powers might the government want

at its disposal to confront the crisis? he asked.

Timothy F. Geithner, who as president of

the New York Federal Reserve Bankoversaw many of the nations most

powerful financial institutions, stunned

the group with the audacity of his answer.

He proposed asking Congress to give the

president broad power to guarantee all the debt in the banking

system, according to two participants, including Michele Davis,

then an assistant Treasury secretary.

The proposal quickly died amid protests that it was politically

untenable because it could put taxpayers on the hook for

trillions of dollars.

People thought, Wow, thats kind of out there, said John C.

Dugan, the comptroller of the currency, who heard about the

idea afterward. Mr. Geithner says, I dont remember a serious

discussion on that proposal then.

But in the 10 months since then, the government has in many

ways embraced his blue-sky prescription. Step bystep, through

an array of new programs, the Federal Reserve and Treasury

have assumed an unprecedented role in the banking system,

using unprecedented amounts of taxpayer money, to try to save

the nations financiers from their own mistakes.

And more often than not, Mr. Geithner has been a leading

architect of those bailouts, the activist at the head of the pack.

Search All NYTimes.com

BusinessWORLD U.S. N.Y. / REGION BUSINESS TECHNOLOGY SCIENCE HEALTH SPORTS OPINION ARTS STYLE TRAVEL JOBS

REAL ESTATE AUTOS

COMMENTS (39)

SIGN IN TO E-MAIL

PRINT

SINGLE PAGE

REPRINTS

SHARE

HOME PAGE TODAY'S PAPER VIDEO MOST POPULAR TIMES TOPICS Try Electronic Edition Log In RegisterNow

PDF stworzony przez wersj demonstracyjnpdfFactory Pro www.pdffactory.pl/
http://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r=1&hphttp://www.pdffactory.pl/http://www.pdffactory.pl/http://www.pdffactory.pl/http://www.pdffactory.pl/http://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r=1&hp


2/5



Share Observations on

Geithners Calendar

The Times is inviting readers to

comb through the calendars and

add remarks.

Mr. Geithners World

Enlarge This Image

Doug Mills/The New YorkTimes

PIONEER Since the financialcrisisbroke, Mr. Geithner has been thefederal regulator most willing to pushthe envelope to look foranswers, saidH. Rodgin Cohen, a prominent WallStreet lawyer.

Readers' Comments

Share your thoughts on thisarticle.Post a Comment Read All Comments (39)

He was the federal regulator most willing to push the

envelope, said H. Rodgin Cohen, a prominent Wall Street

lawyer who spoke frequently with Mr. Geithner.

Today, Mr. Geithner is Treasury secretary, and as he seeks to

rebuild the nations fractured financial system with more

taxpayer assistance and a regulatory overhaul, he finds himself a

locus of discontent.

Even as banks complain that the government has attached too

many intrusive strings to its financial assistance, a range of

critics lawmakers, economists and even former Federal

Reserve colleagues say that the bailout Mr. Geithner has

played such a central role in fashioning is overly generous to the

financial industry at taxpayer expense.

An examination of Mr. Geithners five years as president of the

New York Fed, an era of unbridled and ultimately disastrous

risk-taking by the financial industry, shows that he forged

unusually close relationships with executives of Wall Streets

giant financial institutions.

His actions, as a regulator and later a bailout king, often aligned

with the industrys interests and desires, according to interviews

with financiers, regulators and analysts and a review of Federal

Reserve records.

In a pair of recent interviews and an exchange of e-mail

messages, Mr. Geithner defended his record, saying that from

very early on, he was a consistently dark voice about the

potential risks ahead, and a principal source of initiativesdesigned to make the system stronger before the markets

started to collapse.

Mr. Geithner said his actions in the bailout were motivated

solely by a desire to help businesses and consumers. But in a

financial crisis, he added, the government has to take risk, and we are going to be doing things

which ultimately in order to get the credit flowing again are going to benefit the institutions

that are at the core of the problem.

The New York Fed is, by custom and design, clubby and opaque. It is charged with curbing

banks risky impulses, yet its president is selected by and reports to a board dominated by the

chief executives of some of those same banks. Traditionally, the New York Fed presidents

intelligence-gathering role has involved routine consultation with financiers, though Mr.

Geithners recent predecessors generally did not meet with them unless senior aides were also

present, according to the banks former general counsel.

By those standards, Mr. Geithners reliance on bankers, hedge fund managers and others to

assess the markets health and provide guidance once it faltered stood out.

His calendars from 2007 and 2008 show that those interactions were a mix of the professional and

the private.

He ate lunch with senior executives from Citigroup, Goldman Sachs and Morgan Stanley at the

Four Seasons restaurant or in their corporate dining rooms. He attended casual dinners at the

homes of executives like Jamie Dimon, a member of the New York Fed board and the chief of

JPMorgan Chase.



3/5



Next Article in Business (3 of 34) A version of this article appeared in print on April 27, 2009, on page A1

of the New York edition.

Geithner, TimothyF Get E-Mail Alerts

Banks and Banking Get E-Mail Alerts

ObamaFinancial Stability Plan Get E-Mail Alerts

Subprime Mortgage Crisis Get E-Mail Alerts

Related Searches

Mr. Geithner was particularly close to executives of Citigroup, the largest bank under his

supervision. Robert E. Rubin, a senior Citi executive and a former Treasury secretary, was Mr.

Geithners mentor from his years in the Clinton administration, and the two kept in close touch in

New York.

Mr. Geithner met frequently with Sanford I. Weill, one of Citis largest individual shareholders

and its former chairman, serving on the board of a charity Mr. Weill led. As the bank was

entering a financial tailspin, Mr. Weill approached Mr. Geithner about taking over as Citis chiefexecutive.

NEXT PAGE

Read the complete New York Times Electronic Edition on computer, just as it appears in print.

Ads by Google what's this?

MBA: INSEAD Invites You

+ INSEAD Invites You in Warsaw + + 28th of April: Register Here! +www.Insead.edu

Profit from the crisisTrade currencywith eToro to take advantage of falling markets!www.eToro.com/Crisis

Financial MarketFree Trial to Emerging Markets Analysis & Forecasts Onlinewww.businessmonitor.com/Financial

Past Coverage

Credit Markets StillT ight, Geithner Says (April22, 2009)TALKING BUSINESS; This Time, The Fix Makes Sense (March 28, 2009)BREAKINGVIEWS.COM (March 25, 2009)Rescue Plan, With Fine Print, Dazzles Wall St. (March 24, 2009)

Next Article in Business (3 of 34)

1 2 3 4 5 6 7

http://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r=1&hphttp://www.pdffactory.pl/http://www.insead.edu/http://www.etoro.com/Crisishttp://www.businessmonitor.com/Financialhttp://www.pdffactory.pl/http://www.pdffactory.pl/http://www.pdffactory.pl/http://www.businessmonitor.com/Financialhttp://www.etoro.com/Crisishttp://www.insead.edu/http://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r=1&hp


4/5



Go to Complete List

Paul McInnis

New Hampshire Hilltop Home on 96

Acres Selling at Auction

MOST POPULAR - BUSINESS

1. Corner Office: He Wants Subjects, Verbs and Objects

2. After Off Year, Wall Street Pay Is Bouncing Back

3. Geithner, as Member and Overseer, Forged Ties to FinanceClub

4. Everybodys Business: The Sales Profession: AttentionMust StillBe Paid

5. Unboxed: Customer Service? Ask a Volunteer

6. Strategies: 25 Years to Bounce Back? Try 4

7. Economic View: Before Tea, ThankYour Lucky Stars

8. F.D.A. Allows New Remedy for Arthritis

9. Would Detroit Sound Any Better in Italian?

10. Novelties: Inside These Lenses, a Digital Dimension

nytimes.com/business

The human side of the recessionAlso in Business:

Illustrating a recession

Mattress stuffing, European style

When will housing construction resume?

ADVERTISEMENTS

BLOGGEDE-MAILED



5/5



Ads by Google what's this?

Financial MarketFree Trial to Emerging Markets Analysis & Forecasts Onlinewww.businessmonitor.com/Financial

Labour Regulation SpainComplete Spanish business data on our comprehensive official

sitewww.spainbusiness.com

Merchant BankingCapital Corp helps find the money you need to realize your

project!www.CapitalCorpMerchantBanking.com

BOOKS

Watch Out for Dad

OPINION

Letters: Are Americans JustVillagers at Heart?

DANCE

A Beauty Reawakens inBoston

OPINION

Expiration DateWhen Gary Sheffield wasscooped up by the Mets,another good player wasquietly dismissed, DougGlanville writes.

N.Y. / REGION

StillKicking Up Her Heels on42nd Street

WEEK IN REV

In Budapest, aWorld Now at

Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs RealEstate

Automobiles Back to Top

Copyright 2009 The New York Times Company Privacy Policy Search Corrections RSS First Look Help Contact Us Workfor Us Site Map

INSIDE NYTIMES.COM

http://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r=1&hphttp://www.pdffactory.pl/http://www.businessmonitor.com/Financialhttp://www.spainbusiness.com/http://www.capitalcorpmerchantbanking.com/http://www.pdffactory.pl/http://www.pdffactory.pl/http://www.pdffactory.pl/http://www.capitalcorpmerchantbanking.com/http://www.spainbusiness.com/http://www.businessmonitor.com/Financialhttp://www.nytimes.com/2009/04/27/business/27geithner.html?pagewanted=1&_r=1&hp

Geithner, as Member and Overseer, Forged Ties to Finance Club - NYTimes

Documents

Transcript of Geithner, as Member and Overseer, Forged Ties to Finance Club - NYTimes