Former Treasury Secretary Timothy Geithner has a new book out, in which he gives his take on the most recent financial collapse. So on last night's episode of The Daily Show, Jon Stewart sat him down to go over a few things.
Geithner has long been criticized bailing out the big banks during the financial crisis, and Stewart wasted no time getting right into it: "It seems what [Stress Test] seeks to do is clarify a perception difference, the perception on your end and maybe the government's end that the bailouts worked and were the right thing to do, and the perception on let's say the other end of people who thought that it was the wrong thing to do and didn't work ... This is like an optical illusion, where one person looks at it and they see a pretty girl and then you flip it and the other person looks at it and sees America getting fucked."
"There's only one reality," Geithner said. "The only option, the only responsible, just, moral thing to do in that context, is to protect people from the risk of mass unemployment, which is what happens in financial panics unless governments step in and try to make sure they keep the lights on." In other words, Geithner believes that if the government didn't bailout the big banks, the financial crisis would've been much worse.
To explain, he and Stewart turned to a metaphor: "There was a plane going down, the arsonists were on the plane, it was on fire," Stewart said. The plane, in this case, is the American economy. Geithner goes further: "If it was just the arsonists you could have let the plane crash, that doesn't matter, the problem was there was a bunch of innocent victims who were on the plane, and your first obligation is to figure out how to land that plane safely."
To Geithner, landing the plane safely meant a bailout. "In that context, you have to do the opposite of what seems intuitive and fair, you have to make sure that you're preventing people from running from the system ... we don't do it for the banks and the bankers, you do it to protect [the American people] from their mistakes," Geithner said.
There's just one problem, Stewart interjected. With the bailout, once the plane was landed, it felt like "you took the arsonists off the plane and you got them a massage and a steak dinner," he quipped. To Stewart, it didn't seem like the ones responsible for burning the plane faced many consequences at all.
"It's worse than that," Geithner said. "It's they went and bought themselves a massage and a nice dinner, on us, and the country was still burning."