Link. I’m going to post some of the more interesting excerpts, plus my translation/commentary:
GROSS: So you don’t think the bailouts were too friendly to Wall Street?
GEITHNER: The idea that the strategy was unfair and has principally benefited a small number of institutions in New York is a mischaracterization of the design and result of the strategy. I thought people would have understood this after the failure of Lehman Bros. But when you do too little and you leave the system with real fear that everything is going to fall apart, like any financial crisis, it hurts the poorest most. A just and fair strategy, even if it is politically hardest to explain and justify, is to use well-designed but massive force to stabilize the system.
Translation: Ignore the fact that bailouts resulted in record bonuses in 2009. Think about all those poor people who would be without more credit (debt) had we not acted. Ignore the fact that they still don’t have credit, extending more debt to people is not sustainable, and unemployment is still on the rise.
A bloated financial sector subsidized by government is the lifeblood of our economy. I have this on good authority. My mentor, Bob R. (former Goldman CEO, slayer of Glass-Steagall), Lloyd, and Jamie all agree.
GROSS: The biggest downside surprise?
GEITHNER: The [high] level of unemployment relative to what was happening in the economy as a whole. I’m not an economist, but almost all forecasters missed that. And that’s hugely consequential, because it’s the prism through which most people view basic economic health.
Translation: What’s the problem? The market is up. That means the economy is OK. So why is unemployment still an issue? We injected trillions of dollars here. Our projections show sunshine and rainbows into 2010 and beyond.
GROSS: There’s a perception that you regard your portfolio narrowly, as primarily focused on the health of Wall Street, with Main Street a distant second.
GEITHNER: My first and essential responsibility was to fix and reform the financial system. That was necessarily going to be the principal part of what people saw. About half my time from the beginning has been spent on the design of the broader economic strategy. The idea that we did not do much for the broader challenges facing the country is completely unjustified. The Recovery Act itself was not just a sweeping, essential force for growth but included a bunch of targeted investments in education, energy, environment, health care that will have huge long-term benefits.
Translation: Banks come first. Speculation and mass-bonuses with government backing is crucial to America’s economy. But hey, we’re looking out for the lil’ guy too. After we took care of the really important stuff, we also pledged $787b for questionable pork-barrel projects. Those quilt-museums and $3m turtle highways will create some jobs.
GROSS: What portions of the financial meltdown will the government still be dealing with a year from now?
GEITHNER: This was the worst thing that’s happened in 70 years, and it’s going to have a tail. Unwinding our stakes in autos, in AIG, and in Fannie Mae and Freddie Mac is going to have a somewhat longer fuse. The transition away from this massive government intervention in the housing market is going to take some time. A year from now, the FDIC will still have a large stock of assets from institutions they’ve taken over.
Translation: Kiss those giveaways investments in Freddie, Fannie, and automakers goodbye. The FDIC is also taking on loads of overvalued crap from failed banks, so watch out for that too.
GROSS: What keeps you up at night? What do you worry about?
GEITHNER: Apart from whether my kids are going to be happy in life? What concerns me is whether we will be able to do well enough on the things that are most important. The hardest thing in governing is to make politically achievable the policies that are economically good, just, and sensible for the country. That’s a challenge, partly because of the damage done to the confidence in government and policy in the last two decades, partly because of the populism, and partly because we have to build broad consensus on the Hill in order to do anything meaningful. What countries need in crises the president delivered. He said, this is the plan, and he got it done. But on a range of things that really matter to the future, it requires a coalition to really make legislation happen.
So Tim, the reason it’s hard to make good economic decisions is due to populism? The nerve of those Main Street jackals, asking to be the primary concern of their government. It’s more clear than ever that Tim’s priority is Wall Street. And he doesn’t see anything wrong with that.
Maybe he should read up on Treasury’s mission statement. I don’t see anything in there about propping up a corrupt zombie-banking system.
