Before Timothy Geithner became the 75th Secretary of the U.S. Treasury in 2009, he served as the President of the Federal Reserve Bank of New York for five years. The New York Fed is one of Wall Street’s primary regulators. But after leaving his post at the New York Fed, Geithner testified before the U.S. House of Representatives’ Committee on Financial Services on March 26, 2009 that he was not regulating Wall Street as he earned his $400,000 a year with car, driver and private dining room.
At the 2009 hearing, in response to a question from Congressman Ron Paul, Geithner said:
“That was a very thoughtful set of questions. I just want to correct one thing. I have never been a regulator, for better or worse. And I think you are right to say that we have to be very skeptical that regulation can solve all these problems. We have parts of the system which are overwhelmed by regulation…It wasn’t the absence of regulation that was a problem. It was, despite the presence of regulation, you got huge risks built up.”
When Geithner says, “for better or worse,” I think most Americans would agree that Geithner’s failure to know that he was a regulator at an institution he headed for half a decade that employed hundreds of bank examiners was probably worse for the country, not better, given that he oversaw the greatest financial collapse since the Great Depression and the most expensive taxpayer bailout in the history of finance.
In written testimony before the same hearing, Geithner added that “We can’t allow institutions to cherry pick among competing regulators, and shift risk to where it faces the lowest standards and constraints.” And yet, Geithner’s appointment calendar suggests that this is exactly what Citigroup did as Geithner accommodated it as willingly as a concierge at one of those exclusive Manhattan hotels.
According to Geithner’s appointment calendar for 2007 and 2008 (available online courtesy of an article the New York Times published in 2009), Geithner excelled in hobnobbing, despite the appearance of outrageous conflicts of interest. He was the Relationship Manager In Chief as he managed his own relationship with Citigroup into a job offer to be its CEO.
During 2007 and 2008, Citigroup entered an intractable death spiral owing to a decade of obscene executive pay, off balance sheet debt, toxic assets and mismanagement of its unwieldy disparate business lines. Instead of functioning as the tough cop on the beat in regulating Citigroup, Geithner hobnobbed, holding 29 breakfasts, lunches, dinners and other meetings with Citigroup executives.
When Sandy Weill stepped down from Citigroup in 2006, SEC filings show he still owned over 16.5 million shares of the company’s stock, in addition to the $264 million he had sold back to the company in 2003. As the company teetered toward insolvency in the 2007-2008 period, Weill had a vested interest not to see his stock position wiped out by a government receivership of Citigroup. The very last thing Geithner, as Citigroup’s regulator, should have been doing was meeting privately with Weill.
On January 25, 2007, Geithner not only hosted Weill to lunch at the New York Fed, but Geithner brought his teenage daughter to the lunch. Geithner’s appointment calendar shows Elise Geithner, his daughter, sharing his chauffeured car to work with her father and then joining him at lunch with Sandy Weill. In case you’re wondering, Take Your Daughters and Sons to Work Day was April 26 that year, not the day of this luncheon. A few months later, on May 17, 2007, Geithner joined Weill for breakfast at the expensive Four Seasons.