Competitive Enterprise Institute’s John Berlau says if it’s true that President-elect Barack Obama intends to nominate New York Fed president Timothy Geithner as his Treasury Secretary, it’s not change we can believe in:
The Geithner nomination would be “more of the same” in almost every respect — more bailouts, more lack of transparency in the bailouts, and more corporate welfare. Geithner was the architect of the Bear Stearns bailout and cohort of Treasury Secretary Paulson in American International Group and the TARP bailouts. In choosing Geither, Obama might as well have nominated Hank Paulson to another term! […]
Githner’s [sic] career rise has consisted largely of falling upwards after organizing bailouts, even if the bailouts fail or prove to be unnecessary. With a B.A. in government and Aisan [sic] studies from Dartmouth and an M.A. in International Economics and East Asian Studies from Johns Hopkins, Geithner went to work at Kissinger Associates before coming to the Department of Treasury under the first George Bush in the late 1980s. In 1999, he was promoted to Under Secretary of the Treasury for International Affairs under Clinton Secreataries Rober Rubin and Larry Summers. Geithner was an active player at Treasury around the time of the bailout of Long-Term Capital Management hedge fund, which didn’t involve any taxpayer money, but set the precedent for government intervention in bringing banks together to prop up failing non-bank firms.
He became President of the Federal Reserve Bank of New York in 2003, but elevated himself to on of the top government financial officials earlier this year by organizing the Federal Reserve’s bailout of Bear Stearns that Paulson and Fed Chairman Ben Bernanke quickly signed off on. Despite questionable evidence of whether Bear would even go bankrupt — its creditors may have delayed their collateral calls if they would have been wiped out too –the Fed guaranteed JP Morgan $29 billion from the government to take over Bear, and the government set the stock price Bear’s shareholder’s would get. According to Conde Nast Portfolio, “It was Geithner’s Federal Reserve bank, not the Treasury, that came up with the $29 billion loan that made the deal possible or, more precisely, acceptable to J.P. Morgan.” The magazine noted that Geithner “was the central figure in that drama” who “brought the parties together, [and] hashed out the details.” […]
Berlau wrote for Capital Research Center last year. The piece is “Eco-Terrorism When Violence Becomes An Environmentalist Tactic,” Organization Trends, February 2007.