Legal Commentary

The Geithner Way

By Big Tent Democrat

An interesting article about Tim Geithner as head of the NY Fed. Geithner admits his failings, which is good, but I think the article raises questions about what he is doing now as Treasury Secretary:

That same year [2006 Geithner] initiated a Fed-wide review of how well the financial giants were able to measure their ability to survive the stresses of a market downturn. William Rutledge, the New York Fed's executive vice president for bank supervision, said the reviews turned up several weaknesses. They found that banking companies were pretty good at measuring the risks to specific parts of their businesses but had little understanding of the dangers to the institution as a whole. The firms also failed to account for the kind of worst-case scenarios that would later cripple several banking giants.

[More...]

The New York Fed followed up the study of the stress tests by holding private discussions with bank managers. The Fed officials sought among other things to "encourage" firms to improve their "credit risk-management practices" and to engage in "careful reflection" of their assessment of the global economy's health. . . GAO auditors who recently reviewed the confidential Fed study said the banks pushed back against the idea of expanding their stress tests. . . . Orice Williams, the director of financial markets at the GAO said that regulators "did not take forceful action" to correct the risk-management deficiencies "until the crisis occurred." . . .

(Emphasis supplied.) Does anyone really think Geithner will be more "forceful" now? Is there any evidence that he will? The Geithner Plan to me is strong evidence of just the opposite.

Speaking for me only

Full post as published by TalkLeft on April 03, 2009 (boomark / email).