Tim Geithner's Annotated Exit Interview: "F--- The Banks" And Other Pearls
Today is Tim Geithner's last day as Treasury Secretary. Below are some quotes from various exit interviews and recaps conducted with the former NY Fed president. We provide our succinct annotations to some of his answers.
On the bank bailout:
“To save an economy from a failing financial system, you have to do things that are going to be fundamentally impossible to explain to people,” Geithner said. “You’re going to look like you’re giving money to people who were responsible for burning down the economy.”
He is correct - the people who "burned down the economy" have received over $2 trillion in money since the great financial crisis began courtesy of the Fed...
... and continue to receive $85 billion each month in gratitude for their hard work:
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“F--- the banks,”:
One episode recalls how Geithner, widely thought to be a friend of the financial industry, reacted to concerns of banks protesting Obama’s push for new rules for Wall Street. “F--- the banks,” he said, according to people familiar with the episode.
Another solid dose of the hypocrisy we have all grown to love and expect coming from the man who purposefully leaked material, non-public information to the banks ahead of the critical August 2007 Fed action, upon which the banks subsequently acted as we first reported:
MR. LACKER. If I could just follow up on that, Mr. Chairman.
CHAIRMAN BERNANKE. Yes, go ahead.
MR. LACKER. Vice Chairman Geithner, did you say that [the banks] are unaware of what we’re considering or what we might be doing with the discount rate?
VICE CHAIRMAN GEITHNER. Yes.
MR. LACKER. Vice Chairman Geithner, I spoke with Ken Lewis, President and CEO of Bank of America, this afternoon, and he said that he appreciated what Tim Geithner was arranging by way of changes in the discount facility. So my information is different from that.
CHAIRMAN BERNANKE. Okay. Thank you. Go ahead, Vice Chairman Geithner.
VICE CHAIRMAN GEITHNER. Well, I cannot speak for Ken Lewis, but I think they have sought to see whether they could understand a little more clearly the scope of their rights and our current policy with respect to the window. The only thing I’ve done is to try to help them understand—and I’m sure that’s been true across the System—what the scope of that is because these people generally don’t use the window and they don’t really understand in some sense what it’s about.
F--- the banks indeed... But not before we give them a few [_]illion dollars in funding.
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On rewriting the nation’s financial rules:
Early in the process, during a meeting with Obama at the White House, Jamie Dimon, the chief of executive of JPMorgan Chase, made an offer to come with other bankers to Treasury to help develop the broad framework for how to tighten oversight of Wall Street. Geithner declined. Dimon followed up. Geithner declined again. Dimon grew frustrated and complained personally to Obama and others in the White House that Geithner was being unhelpful, according to people familiar with the matter.
To his colleagues, the Treasury secretary described bankers who relentlessly protested the new regulations as “whiners” and, in routine meetings with top chief executives held at the Willard Intercontinental Hotel, he often told them they should stop fighting regulation.
That at least is the spin. Here are the facts as presented by Dallas Fed president Dick Fisher:
As of third quarter 2012, there were approximately 5,600 commercial banking organizations in the U.S. The bulk of these—roughly 5,500—were community banks with assets of less than $10 billion. These community-focused organizations accounted for 98.6 percent of all banks but only 12 percent of total industry assets. Another group numbering nearly 70 banking organizations—with assets of between $10 billion and $250 billion—accounted for 1.2 percent of banks, while controlling 19 percent of industry assets. The remaining group, the megabanks—with assets of between $250 billion and $2.3 trillion—was made up of a mere 12 institutions. These dozen behemoths accounted for roughly 0.2 percent of all banks, but they held 69 percent of industry assets.
In simple terms: total bank assets: $13 trillion; 69% of that is $9 trillion. So 12 banks, among which the very much "complaining" Jamie Dimon, and other "whiners" control $9 trillion. And that is how TBTF became TBTFest. But at least they are whining.
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And last but not least:
“I have no idea what I’m going to do,” Geithner said. “For all my professional life, I’ve made basically one choice about what kind of work I want to do. And the reasons that led me to that are very powerful and are very enduring.”
Will Geithner be the next Fed chairman:
“Not a chance,” he said. “I have great respect for the institution, but that will be someone else's privilege.”
Instead of commenting, we will merely post Geithner's assessment of America's downgrade risk 4 months before it was downgraded.
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