May 13, 2014

Geithner Says He Was Told to Lie During Financial Panic

Former Treasury Secretary’s book has created a buzz about recent history.

It’s time for another Washington memoir, and up for the talk show circuit this time around is former Treasury Secretary and alleged tax cheat Timothy Geithner. His book, “Stress Test: Reflections on Financial Crises,” hit the stores this week, and he offers some juicy tidbits about how Obama administration officials put him in compromising positions. But he seems to spend most of the 500-plus pages justifying his actions in the early months of the 2008-2009 financial crisis.

Geithner has a lot to say about the banking system and the mechanics of investment institutions, but he has never spent a day working in one. With the exception of a three-year stint with Kissinger Associates, he has been working for the government and non-governmental organizations his entire career. He spent 13 years at the Treasury Department, where he got to know fellow liberal wonks Robert Rubin and Larry Summers. He then worked for the International Monetary Fund, and later was recommended by Rubin and Summers for the presidency of the Federal Reserve Bank of New York. It was in this post that Geithner came to the attention of the Obama administration and was picked to head the Treasury Department.

Geithner was on the job just a few days when he became exposed to the real politics of Washington. According to his book, he was approached by Obama aide Stephanie Cutter before a press gathering in the Oval Office. She wanted him to make remarks decrying executive bonuses at Wall Street firms. Geithner writes that he refused to do so, fearing that the government arbitrarily rewriting agreements with financial institutions and mandating payouts in the private sector would send the wrong message. That’s putting it mildly.

“I remember during one Roosevelt Room prep session before I appeared on the Sunday shows,” Geithner writes, “I objected when Dan Pfeiffer wanted me to say Social Security didn’t contribute to the deficit. It wasn’t a main driver of our future deficits, but it did contribute. Pfeiffer said the line was a ‘dog whistle’ to the left, a phrase I had never heard before. He had to explain that the phrase was code to the Democratic base, signaling that we intended to protect Social Security.” In other words, he was told to lie for political gain. Where have we heard that before?

Geithner recounts that he had difficulty grasping the stability of large financial firms. He didn’t see the mortgage crisis coming, but he defends bailing out financial firms. He rejects the moral hazard argument that the bailouts would merely lead to more risky behavior and undercut faith in the financial sector due to excessive government interference. Geithner also maintains that the government’s actions during the financial crisis prevented a far worse calamity. And yet “too big to fail” is now virtually institutionalized policy, while banks have grown bigger than ever.

His argument makes for little more than a nice excuse because it can never be proven – there is no alternate reality in which the government remained within its enumerated powers.

There will always be disagreement whether Geithner’s actions were good or bad for the country during a time of crisis, but six years later, we can be certain that the national debt is approaching $18 trillion, and the economy is experiencing near-zero growth. That and we now have a permanent template for greater government interference in the economy. Hardly proof of success.

For more background on the financial crisis, read Mark Alexander’s Economics 101: Crisis of Confidence.

Who We Are

The Patriot Post is a highly acclaimed weekday digest of news analysis, policy and opinion written from the heartland — as opposed to the MSM’s ubiquitous Beltway echo chambers — for grassroots leaders nationwide. More

What We Offer

On the Web

We provide solid conservative perspective on the most important issues, including analysis, opinion columns, headline summaries, memes, cartoons and much more.

Via Email

Choose our full-length Digest or our quick-reading Snapshot for a summary of important news. We also offer Cartoons & Memes on Monday and Alexander’s column on Wednesday.

Our Mission

The Patriot Post is steadfast in our mission to extend the endowment of Liberty to the next generation by advocating for individual rights and responsibilities, supporting the restoration of constitutional limits on government and the judiciary, and promoting free enterprise, national defense and traditional American values. We are a rock-solid conservative touchstone for the expanding ranks of grassroots Americans Patriots from all walks of life. Our mission and operation budgets are not financed by any political or special interest groups, and to protect our editorial integrity, we accept no advertising. We are sustained solely by you. Please support The Patriot Fund today!


The Patriot Post and Patriot Foundation Trust, in keeping with our Military Mission of Service to our uniformed service members and veterans, are proud to support and promote the National Medal of Honor Heritage Center, the Congressional Medal of Honor Society, both the Honoring the Sacrifice and Warrior Freedom Service Dogs aiding wounded veterans, the National Veterans Entrepreneurship Program, the Folds of Honor outreach, and Officer Christian Fellowship, the Air University Foundation, and Naval War College Foundation, and the Naval Aviation Museum Foundation. "Greater love has no one than this, to lay down one's life for his friends." (John 15:13)

★ PUBLIUS ★

“Our cause is noble; it is the cause of mankind!” —George Washington

Please join us in prayer for our nation — that righteous leaders would rise and prevail and we would be united as Americans. Pray also for the protection of our Military Patriots, Veterans, First Responders, and their families. Please lift up your Patriot team and our mission to support and defend our Republic's Founding Principle of Liberty, that the fires of freedom would be ignited in the hearts and minds of our countrymen.

The Patriot Post is protected speech, as enumerated in the First Amendment and enforced by the Second Amendment of the Constitution of the United States of America, in accordance with the endowed and unalienable Rights of All Mankind.

Copyright © 2024 The Patriot Post. All Rights Reserved.

The Patriot Post does not support Internet Explorer. We recommend installing the latest version of Microsoft Edge, Mozilla Firefox, or Google Chrome.