Timothy Geithner's Best Asset: Everybody Hates Him

A lack of ideological bias has allowed him to pursue practical solutions to deal with crises

615 Geithner unbrella REUTERS Jason Reed.jpg

If you're a conservative, then you probably have no love for Treasury Secretary Timothy Geithner. He wanted to end the Bush tax cuts for the rich in 2010. You might think his foreclosure prevention plan was a mess. But if you're a progressive, then you probably don't love the guy either. He wasn't particularly aggressive in pursuing cramdowns or principal reductions for struggling homeowners. He also doesn't tend to be too hard on the banks. So who does like Geithner? President Obama must -- he worked to ensure that Geithner wouldn't resign earlier this year when his family moved back to New York. It isn't hard to see why: Geithner is a rare breed of high-level official who looks for practical solutions without letting politics get in the way.

Jackie Calmes at the New York Times highlights the president's surprising unwavering desire to keep Geithner around as other economic advisors departed over time. Calmes notes that both sides of the aisle have attacked Geithner's policies and positions over the past couple of years. Let's look at some of the chief reasons why people don't like Geithner.

He Went Too Easy on the Banks

Those who lean left sometimes criticize Geithner for being too friendly to the banks. Indeed, some even accuse him of having worked for Goldman Sachs. (He didn't.) In fact, Geithner's financial reform proposal that preceded Congress' legislation set the tone for many of the provisions that eventually were passed -- and we all know how much noise the banks have made about that bill. He also helped to ensure that the government got back more than it provided the banks in the 2008 rescue, as taxpayers ultimately made a profit on the bank bailout.

To be sure, he could have been harder on the banks. But don't forget: the financial crisis was a time when the banking industry nearly collapsed. The entire purpose of the bailout and subsequent stability programs was to ensure that the industry survived. Even if harsher punishment was justified, it would have been impractical until the broader economy had improved. So even if Geithner did want to go harder on the banks, he likely understood that doing so would make everyone worse off.

His Housing Policy Was Too Aggressive / Not Aggressive Enough

When I first read the Treasury's mortgage modification plan in early 2009, I thought it would result in a fairly large number of modifications. I was wrong -- it will struggle to reach the 1 million mark. The program was crafted as a way to gently persuade banks to modify mortgages without compelling them to do so with lots of carrots but few sticks. And remember, this was before we knew about all of the bank's foreclosure process flaws.

Still, critics on the right think that government-induced mortgage modifications are unfair to borrowers who dutifully pay their bills, while critics on the left want to see the government aggressively force banks to write-down principle to end foreclosures. Either option is extreme. Geithner took a moderate approach by providing incentives for banks to modify mortgages without compelling them to declare deep losses on underwater loans that could endanger stability.

Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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