What with all the health care news, I'm getting to this late but Treasury Secretary Tim Geithner's speech before the American Enterprise Institute on Monday merits mention. Maybe I'm reading too much into it, but does it seem that Geithner used his speech to practice self-therapy?
Listen less to those whose judgments brought us this crisis. Listen less to those who told us all they were the masters of noble financial innovation and sophisticated risk management. Listen less to those who complain about the burdens of living with smarter regulation or who oppose having to pay a fee for the costs of this or future crises.
Instead, listen to the families and businesses still suffering from this crisis. Listen to those who borrowed responsibly but today can't get a loan or can't refinance their mortgage. Listen to those who lost their jobs and their healthcare and their pension savings. Listen to them.
To be sure, Geithner wasn't one of the brainiacs responsible for nearly blowing up the global financial system. Still, as the former New York Federal Reserve president, he was at the helm while Wall Street was losing its collective mind. As such, Geithner has come in for his share of flak from critics who say that he's still Wall Street's boy and more interested in protecting corporate interests than in watching out for the peoples' interests.=>
All the more remarkable, then, to read Geithner's speech, which made the case for a dramatic restructuring of the financial system to prevent history from repeating. Naturally, "dramatic" is in the eye of the beholder. But did anyone outside of the province of Glennbeckistan really expect to hear Geithner call for the elimination of profit and the socialization of the means of the production? Even Simon Johnson, a sharp critic of the Treasury Secretary, offered up guarded applause. =http:>
When a conservative Republican President - George W. Bush, a President with abiding faith in markets who proposed privatizing social security - is forced by a financial crisis to put Fannie Mae and Freddie Mac into conservatorship, companies that combined -at their peak - represented more than $130 billion in shareholder value;
When a conservative Republican President is forced by failures of financial policy to ask Congress for $700 billion in authority to stabilize the financial system and to invest this taxpayer money into banks that account for three quarters of the entire U.S. banking system;
When a conservative Republican President is forced by a recession, caused by financial failures, to lend billions of dollars to two of our largest auto makers;
When a conservative Republican President is forced to do all that - and he was right to do it - there's something undeniably wrong with the economy.
When the American financial system - once the envy of the world - takes trillions of dollars of savings and puts it into an unsustainable real estate boom while under-investing in innovation, infrastructure, and the technologies of the future, there's something undeniably wrong with the system.
Robert Wenzel, the editor of Economicpolicyjournal.com, joked that Geithner must have hired a new speech writer. Droll, but the fact is that with the conclusion of the battle over health care reform, the Obama team is going after Wall Street. This was just the opening shot. Will it be another long march, a la health care reform? That all depends on whether the Republicans decide to play along this time. =http:>