Sheila Bair and Felix Salmon on Tim Geithner's book

[Slimprofits]

Bair: http://finance.fortune.cnn.com/2014/...-tim-geithner/

At least Tim is honest about his acceptance of mega-banks and his disinterest in ending too-big-to-fail. But what's troubling is his failure to acknowledge the inherent instability created when Wall Street thinks it has a giant put on Uncle Sam. He accepts the risks of moral hazard when it comes to bailing out homeowners, but not the mega-banks. He almost naively assumes that the titans of Wall Street can somehow rise above the temptation to take outsized risks when they know the government will always be there to bail them out. Yet, when it comes to homeowners, Tim worries about the moral hazard government relief efforts create. Indeed, he justifies his limited efforts to help homeowners, in part, by saying that he didn't want to reward the behavior of those who knowingly got in over their heads.

While an enjoyable read, Tim's book is also a warning. As much as he is trying to justify the decisions he made and actions he took during the crisis, I sense he is also trying to prep the public for future bailouts. And with this message, I fear, he is reflecting the unspoken views of many on Wall Street where he is now employed: The system is still unstable, there will be another crisis, and yes, they will need to be bailed out again. Of course, Wall Street titans would like bailouts to be new paradigm -- after all, they are so much easier than trying to reform the system and hey, they made money last time!

Salmon: https://medium.com/p/fc88741a0025 - Basically, Felix points out that it's not a historical account, rather it's Geithner's imagination at work. I am reminded of this image:

[mmr]

Re: Sheila Bair and Felix Salmon on Tim Geithner's book

For what it's worth:

Finance Gadfly Sheila Bair Takes a Banking Job

It was perhaps inevitable that Sheila Bair, former head of the Federal Deposit Insurance Corp. and one of the most clear-eyed critics of the policies and practices that helped cause the 2008 financial crisis, would eventually join the financial sector in some capacity. What is surprising is that she waited as long as she did.

Unlike many of her colleagues from the time—former Treasury Secretary Timothy Geithner, starting work with private equity firm Warburg Pincus on March 1, comes to mind—Bair has been working for a living since she left the FDIC in 2011, serving as an adviser to nonprofit Pew Charitable Trusts and as the chair of a think tank. No doubt the news that she’s joining the board of Spanish bank Santander will prompt screams about the revolving door between government and the private sector. According to the Wall Street Journal, Bair attended her first board meeting at her new bank on Monday....

“I would like to see financial regulation be viewed as a lifelong career choice—similar to the Foreign Service—rather than a revolving door to a better-paying job in the private sector,” she wrote in her book. “There should be a lifetime ban on regulators working for financial institutions they have regulated.”

[Slimprofits]

Re: Sheila Bair and Felix Salmon on Tim Geithner's book

Thanks for posting that, mmr. Santander is a Spanish bank that was big into subprime auto lending, in the US, during the height of the credit bubble. They left and came back, this time, with a big foray into the retail banking sector. It is disappointing to find out that Bair does not really walk the walk. Edit: And lest anyone thinks I'm a hypocrite on this, just yesterday I told a temporary agency recruiter that I would not interview for a gig with a local JPM Chase subsidiary.