The man who engineered the Bear Stearns bailout
The Bear Stearns bailout was a major break with precedent — and not just because the Fed came to the rescue of an investment bank as opposed to a retail bank.
Now, it turns out the man who did the most to bring it about wasn't Ben Bernanke, or Hank Paulson, or even anyone with a banking or economics background, but rather — well, how else to put it? — an apparatchik within America's power elite. He's one Timothy F. Geithner, president of the New York Federal Reserve Bank. Kudos to Bob Novak for unearthing this story:
Quick action last week when Bear Stearns was going under contrasted
sharply with the normally lugubrious pace of the U.S. federal
government. Ben Bernanke, Alan Greenspan's scholarly successor as
Federal Reserve chairman, of course approved the bailout (as did
Treasury Secretary Henry Paulson). But the initiator was Geithner, who
as head of the New York Fed maintains a traditional intimate
relationship with Wall Street. Neither a banker nor an economist,
Geithner left Kissinger Associates in 1988 at age 27 to go to work at
the Treasury and begin an uninterrupted career in government service
(promoted in 1999 by Treasury Secretary Robert Rubin to under secretary
for international affairs).
Novak seems a bit disturbed, as well he should, that the extraordinary precedent set by here is getting so little attention. After Bear Stearns, who's next? Lehman? Fannie? Freddie? The sky's the limit, thanks to the machinations of Mr. Geithner.
The expense of such an intervention is not a problem because the Fed,
unlike the president and Congress, can print money. The Bear Stearns
bailout, approved in private by unelected officials, contributes to
paranoid grievances on the left and right that built support for Ron
Paul's presidential candidacy.
One might quibble with Novak's use of the adjective "paranoid," but otherwise he seems genuinely sympathetic to the concerns about the Pandora's box that's just been opened. Too bad there aren't more voices in the establishment media like his.
Sphere: Related Content
Novak may call it paranoid grievances, but isn’t the Bear Stearns bailout just the sort of thing a critic of America’s brand of capitalist economy can cite as proof that the government implements policies that favor the wealthy and big business?
Hate to say it, but Ralph Nader has a point when he says that capitalism will never fail - because the federal government will use socialism to rescue it.
Comment on March 21, 2008 @ 8:31 am
Geithner, Bernanke, or Paulson; does the name behind the scene really matter? Bailouts have happened before (Long Term Capital Management) and they will happen in the future.
Comment on March 23, 2008 @ 1:31 am
[...] the morning's headlines. Yes, the nationwide average gas price has topped $4.00 and the most powerful man in America who no one's ever heard of is floating some sort of global financial regulatory [...]
Pingback on June 9, 2008 @ 8:55 am
[...] mind the morning’s headlines. Yes, the nationwide average gas price has topped $4.00 and the most powerful man in America who no one’s ever heard of is floating some sort of global financial [...]
Pingback on June 9, 2008 @ 4:11 pm
[...] in American society over the last two decades. As we noted last spring, Geithner was the key player in the engineered demise of Bear Stearns, and in subesequent events he's played a role just as [...]
Pingback on November 21, 2008 @ 3:32 pm
[...] guessing the latter. So why the celebration when even a cursory examination of Geithner's history indicates the new boss will be the same as the old boss? As the New York Times reported just [...]
Pingback on November 24, 2008 @ 9:45 am
[...] guessing the latter. So why the celebration when even a cursory examination of Geithner's history indicates the new boss will be the same as the old boss? As the New York Times reported just [...]
Pingback on November 24, 2008 @ 9:45 am