Boy, Tim Geithner just did a terrible job introducing his Financial Stability Plan, on every level.
First of all, there isn’t actually a plan – it’s more a series of goals and principles, and in some cases even that’s generous. There’s a lot of “we’ll increase transparency by working with the SEC to increase transparency” and “we’ll set up a comprehensive stress test that will increase confidence” and “we’re committed to continuing to work toward lower mortgage rates.” These are not specific actions of any kind.
As a consequence of the above, I get two very bad impressions about where we’re going. Geithner and the Administration generally probably haven’t come to any substantive conclusions about what needs to be done. Therefore, they are going to continue down pretty much the same road laid out by Paulson and Bernanke – and probably in a similarly ad-hoc manner. Which is not particularly encouraging.
And the atmospherics reinforced these negative impressions. I know it shouldn’t matter, but Geithner looked and sounded like an elf giving a book report, not a Treasury Secretary. More significantly, he spent a great deal of time blaming the previous Administration for not acting boldly enough before unveiling this decidedly unimpressive package of semi-proposals.
I came in predisposed to like Geithner. He’s somebody who showed evidence of understanding the credit derivatives markets before they became a central player in a financial crisis. He understands Wall Street but isn’t beholden to any Wall Street firm – as a long-time government employee, he could be truly independent in the way that a Treasury Secretary should be. And he had a reputation of being a “no drama” kind of guy. But this was a spectacular flop of a speech. And if we’re going to see more of this, I wouldn’t expect him to last too far into this Administration. Obama’s not known for hanging on to people who become liabilities.