As Crisis Loomed, Geithner Pressed But Fell Short

Source: Washington Post

As Crisis Loomed, Geithner Pressed But Fell Short
Before Timothy Geithner became Treasury chief, he regulated major U.S. banks. Now he says: "We're having a major financial crisis in part because of failures of supervision."

By Robert O'Harrow Jr. and Jeff Gerth
Washington Post Staff Writer
Friday, April 3, 2009; A01

In September 2005, Timothy Geithner made one of his most visible moves as a supervisor of the U.S. banking system. He summoned the nation's top financial firms and their regulators to streamline an antiquated system that threatened Wall Street's boom.

Billions of dollars worth of financial instruments known as credit derivatives were being traded daily, as banks and investors worldwide tried to protect against losses on increasingly complex and risky financial bets. But the buying and selling of these exotic instruments was stuck in a pencil-and-paper era. Geithner, then head of the Federal Reserve Bank of New York, pressed 14 major financial firms to build an electronic network that would cut backlogs and make the market easier to monitor.

Geithner's summit, held at the New York Fed's fortress-like headquarters near Wall Street, was a success. By fall 2006, the new system had all but eliminated the logjam, helping derivatives trade more efficiently. One financial industry newsletter honored Geithner as part of a "Dream Team" for his leadership of the effort.

Yet as Geithner and the New York Fed worked to solve narrow mechanical issues in the derivatives market, they missed clear signs of a catastrophe in the making. When the housing market collapsed, derivatives stoked the fires that ignited inside some of the biggest banking companies. The firms' failure to assess an array of risks they were taking has emerged as a key element in the multitrillion-dollar meltdown of the global financial system.

Read more: http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040203227_pf.html

I guess, in a sick and twisted way, we owe him thanks for that. :evilgrin:

in the man....IMO

I don't see how Geithner could have been expected to do a lot of activism from his role given how Greenspan was directing the place. It was a systemic regulation issue.

Trickle down ....doesn't...

the very beginning.

How reassuring.

Change anyone? :sarcasm:

You learn something new every day.

Sydney Herald had article about three weeks ago, outlining how Geithner had been sent to the Far East, per directives of the IMF, to help shore up their economies during their crisis. He had one of two models to choose from -a task that should not have overwhelmed him.

And he picked the model that further sank those economies.

So whatever/whoever suggested to Obma to choose this guy?

No, make that demand to know!

Damnit!