President Obama's proposal to put limits on bank size may be good news for banker-hating populists (and the Democrats who
want their vote), but not so for Treasury Secretary Timothy Geithner.
Geithner has long advocated,
and typically secured, much more moderate regulations. So it probably
shouldn't be hugely surprising to find Reuters report that Geithner is privately grumbling
about the new measures. But private grumbling is frowned upon in
the discipline-focused Obama White House. And with fellow finance
official Fed Chairman Ben Bernanke at risk of losing his job in the very near future, should Geithner be worried about his longevity?
- He Better 'Get With The Program' EconoBlogger Simon Johnson suggests the possibility that "Geithner is not on board with the policy shift. This would be understandable, as it directly repudiates what he has worked hard to achieve over the past year." But Obama "cannot fight this issue and these people effectively if his Treasury Secretary is not on board" without getting "hammered" at the polls in 2010. Johnson adds, "in Geithner's partial defense, the proposal is pretty vague, and there are disturbing hints that the size component will only cap future growth rather than break up the current big banks."
- He's Not Serious About Regulation The New York Times's Paul Krugman shakes his head. "Obama needs to find some officials who can talk about taking on Wall Street as if they mean it," he writes. Krugman says of Geithner's recent PBS appearance, "Geithner might as well have had a chyron underneath as he spoke, with the words DON'T WORRY, WE'RE NOT GOING TO TAKE ANY REAL ACTION."
- Why Geithner Can't Be Fired EconoBlogger Bruce Bartlett explains. "The problem with replacing him, as I have said earlier, is finding someone who is qualified, confirmable and not connected to Wall Street. Given that half the top political appointees at Treaasury are still awaiting Senate confirmation, I think Obama may be stuck with Geithner no matter how low his stock falls." Senate Republicans, after all, can block any appointee they want, and frequently do, leaving entire agencies understaffed.
- ...And Why Republicans Love That The Washington Post's Ezra Klein agrees, adding, "I thought of ending this post with a line about how Republicans who want Geithner gone are actually making it impossible for him to go, but then I realized that Republicans probably don't want Geithner gone. They're served best by making him both unpopular and irreplaceable."
- Proves Bank Limits Won't Work The Washington Independent's Mike Lillis writes, "Some economists are already doubting the effectiveness of the proposed reforms to prevent the types of lending that led to the economic collapse. That failure is all but guaranteed if even the administration's own finance officials aren't on board."