Not everyone is happy with Tim Geithner’s new book.
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Street Test is the new memoir from former US Treasury Secretary Timothy Geithner. It is not due to hit the bookshelves until next Monday, but people are already reacting to the advance copies that have been released.
Two of the people who have issued sharp criticism of claims made in the book are conservatives Glenn Hubbard, a Harvard Economist, and Neil Barofsky who headed a watchdog agency which monitored the US government’s bank bail outs.
Mr. Geithner makes the claim that he had a conversation with Hubbard in which Hubbard complained about President Obama’s lack of support for the Simpson-Bowles deficit reduction plan. During the 2012 presidential campaign, Glenn Hubbard served as an adviser to Republican candidate Mitt Romney. According to Geithner, he told Hubbard that Republicans needed to support some tax increases before the President would support the plan and that Hubbard acknowledged that taxes would need to be increased.
This story implies that the former governor of Massachusetts, Romney, would have agreed to tax increases had he become president; even though, he had signed the Americans For Tax Reform Pledge never to do so.
In a statement to Politico, Professor Hubbard said, “Geithner is making it up. It’s pretty simple. It’s not true.”
In an e mail to the Huffing Post, Geithner spokeswoman Jenni LeCompte wrote in response, “Mr. Geithner stands by his accounts in Street Test. Mr. Geithner’s memory on this exchange is crystal clear.”
The former Treasury Department special inspector general overseeing the Troubled Assets Relief Program, Neil Barofsky. has even more complaints.
On Neil Barofsky, Geithner says that he was unqualified for his position running the watchdog agency, called SIGTARP, and that the organization hurt the administrations efforts to promote the bank bail outs with the American people. “Barofsky’s desire to prevent perfidy was untainted by financial knowledge or experience. He assumed our motives were self-evidently sinister, as if we had helped banks for fun and profit rather than to cure a metastasizing financial crisis, ” says Geithner in Street Test.
In a posting on LinkedIn last Friday Barofsky accused Geithner of lying when he claims that former Treasury secretary, Hank Paulson, apologized to Geithner for “bequeathing me Barofsky.” “Mr. Geithner refuses to allow facts to get in the way of good hyperbole, ” Barofsky wrote.
Other claims made by the former Treasury Secretary in his book include a discussion in the White House about nationalizing some of the banks that were failing due to the crisis of 2008. He maintains that former head of the National Economic Council, Larry Summers, told the President Obama that he should “preemptively” nationalize some banks. But Geithner opposed this move as he feared “fueling unrealistic expectations about our ability to eradicate extravagance in the financial industry”
“I did not view Wall Street as a cabal of idiots or crooks, ” Geithner wrote. “My jobs mostly exposed me to talented senior bankers, and selection bias probably gave me an impression that the U.S. financial sector was more capable and ethical than it really was.”
Mr. Geitner also voices his opinion of his predecessor’s decisions regarding Lehman brothers. President Bush’s last Treasury Secretary, Henry Paulson, served when the financial crisis hit in 2008 and after orchestrating a bail out of the failed Bear Sterns, he declined to do the same for Lehman Brothers. Mr. Paulson’s reasoning at the time was that the Federal Government could not make it its business to save every financial institution.
But Mr. Geithner felt at the time that the failure to bail out Lehman would undermine the government’s ability to rescue the failing financial institution if it became necessary. In the end, Lehman Brothers declared bankruptcy, sending a ripple effect through Wall Street as investors pulled out of financial institutions having lost confidence in them.
Much has been written criticizing Paulson’s decision on Lehman as having further exacerbated the financial crisis. If Paulson had made a public show of support for Lehman brothers, then it may have been easier for it, according to Geithner, to find an investor who might have saved it. This in turn might have kept the crisis from worsening.
Timothy Geithner, 52, served as President Obama’s Treasury Secretary for his entire first term of office. He previously served as President of the Federal Reserve Bank of New York where he played a key role in the handnling of the financial crisis in 2008. he graduated from Dartmouth in 1983 and has an MA in international economics and East Asian studies from Johns Hopkins University’s School of Advanced International Studies.