Streetwise Professor

Timmy! Geithner is joining the pitchfork-and-torches crowd.   First, he blasts financial executive pay, and demands immediate changes:

“It is very important that we change the way these executives are paid, the form of compensation, this year,” Geithner said in an interview yesterday for Bloomberg Television’s “Political Capital with Al Hunt,” which is being aired throughout the weekend. “We have to end that era of irresponsibly high bonuses.”

Then he disputes Goldman’s contention that it didn’t need assistance at the height of the crisis:

Tim Geithner on Friday rejected Goldman Sachs‘ claim that it could have withstood the financial crisis without government intervention, adding that all banks were at risk of being wiped out.

“None of them would have survived a situation in which we had let that fire try to burn itself out,” the US Treasury secretary said on Friday in an interview with Bloomberg Television.

The Bloomberg article has more from Timmy!:

“None of them would have survived” had the government stood aside and let the crisis run its course, he said. “The entire U.S. financial system and all the major firms in the country, and even small banks across the country, were at that moment at the middle of a classic run, a classic bank run.”

Why, oh why, won’t anyone ask Geithner how he can, out of one side of his mouth, speak in such apocalyptic tones about the state of the financial system during the time of the AIG and Lehman collapses, and out of the other side of his mouth, tell the SIGTARP that the financial condition of AIG’s counterparties was not a relevant consideration in the decision to proceed with the AIG bailout?   How is it possible for these two things to be true?   I’ll answer my own question: It’s not.   He’s lying.

But this all raises the question of why, now, does Geithner feel compelled to go all populist?   My surmise: the left wants his head, and this is his attempt to save it.

This thought popped into my head last night reading the FT piece, and lo and behold, this morning I read the latest Taibbi screech in Rolling Stone*:

Not only are the mop-headed weenie of a Treasury secretary’s fingerprints on virtually all the gross giveaways in the new reform legislation, he’s a living symbol of the Rubinite gangrene crawling up the leg of this administration.   Putting Geithner against the wall and replacing him with an actual human being not recently employed by a Wall Street megabank would do a lot to prove that Obama was listenting this past election day.   And while there are some who think Geither is about to go–“he almost has to,” says one Democratic strategist–at the moment the president is still letting Wall Street do the talking.

And you thought I was cruel to Timmy!

Taibbi and I come at this from different universes.   Taibbi sees Geithner as a Wall Street stooge whose legislative proposals are a big fat wet kiss to the big banks.   I see these same proposals as dangerously interventionist and inefficient (especially as related to derivatives), although I do believe that many of the policies Geithner has implemented and proposed do play into the banks’ hands and exacerbate moral hazard problems.   Taibbi and I agree, I would imagine though, on Geithner the man as utterly untrustworthy.

The Taibbis of the world and his ilk are much more dangerous to Geithner’s future than classical liberal/libertarian types like me.   Hence his sudden populist turn, and his turning on Goldman in particular.

I doubt, however, that will be sufficient to save him and his job.   The only thing that can do that is a fairly strong improvement in the American economy.   As the administration’s top economic policymaker, he is acutely vulnerable if the recovery stalls, or another major financial problem hits, or the stock market takes a hit.   And we all know that Obama has no compunctions about heaving people over the side when they become liabilities: he is the anti-Bush in all things, including in the loyalty department.

Thus, yesterday’s unemployment number (widely misinterpreted though it was), did far more for Geithner’s job prospects than bashing Goldman.   With JP Morgan’s Jamie Dimon actively campaigning for his job, the left howling for his head, and Barack “what do you mean we?” Obama having his back, Geithner is a hostage to the nation’s economic fate.

* I have no clue why I get Rolling Stone delivered to me.   I didn’t subscribe. My kids swear they didn’t.   I can find no record of having paid for it.   Fan mail?   Practical joke? Got me.