Word: geithner
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...part, Geithner has shown a solid mix of composure and creativity throughout. In testimony on Capitol Hill and in public statements he comes across as levelheaded and even soft-spoken. Says John Sexton, the president of New York University, who previously chaired the committee that picked Geithner for the New York Fed job: "I've been in conversations with Tim on critically important and time-sensitive issues, crises, and I've been struck by his ability to stay calm...
...Geithner also is known for speaking his mind, sometimes forcefully, behind the scenes. In one now famous fight with FDIC chief Sheila Bair the weekend of Oct. 12, 2008, he argued in blunt terms for the need to bolster banks with FDIC guarantees even as Bair was resisting details of a plan. His current job is due in part to his reputation for standing up to powerful people, says Sexton. "[Former Deputy Treasury Secretary] Larry Summers told us that Tim was one of the very few people who, when Larry got on a roll, would sometimes take him up short...
...Geithner is working with a fairly well thought-out historical perspective on the crisis. He believes the U.S. government allowed the creation of a massive shadow banking system run by investment banks, hedge funds and brokerage firms over the last 30 years that rivaled the traditional system in size but lacked every one of the stabilizing pillars that had been erected beneath it after the Great Depression: deposit insurance, access to a lender of last resort, a system for orderly failure, and reasonable constraints on risk and leverage. With near bottomless funds from money-market investments and sky-high leveraging...
...Much of what Geithner, Treasury Secretary Henry Paulson, Federal Reserve Chief Ben Bernanke and Bair have done so far has been to erect ad hoc pillars in the crisis: guaranteeing money-market funds after a run began on them in October; opening the Fed lending windows wide to keep credit from freezing completely; and intervening to wind down big players with a semblance of order, without which we could have seen a retail panic against a Merrill or Wachovia or AIG. As Treasury Secretary, Geithner will play a large role in erecting the last pillar - regulating risk and leverage...
...Geithner also brings a good grip on the international mechanisms at work in the crisis, having traveled the world during the financial panic of 1998. He worked for Summers in the Clinton Treasury Department at the time, and he and Summers became mutual admirers. That job also exposed him to many of the national-security issues that Treasury now handles, like cracking down on the transfer of funds across borders by terrorists, and the targeted application of sanctions against the leaders of rogue states...