Pretty much expected. Clever timing on the announcement though. Now the endangered banks have 60-70 hours to figure out a game plan for next week.
huh?
As president of the New York Federal Reserve Bank since Oct 2003, it was Tim Geithner's job to regulate the banks, and we can see how that went. Then, in mid Sept 2008, it was HIS decision to let Lehman fail even though it was too big to fail without bringing down the whole banking system.
And now this guy is going to be Treasury Secretary?!
While Lehman Brothers was the first bank to fail, it was not a catalyst for other banks to fail. And, in retrospect, letting it fail was the correct decision.
Letting Lehman fail over the weekend of Sep13-14th was the single biggest mistake of this whole sad affair. There were trillions of dollars of credit default swaps exposure tied to Lehman that were held by other institutions, and Lehman's failure guaranteed a lot of other firms would go belly up.
Tim Geithner's decision over that weekend literally cost us Trillions of dollars.
How you call that "the right decision" is beyond me. This guy is incompetent and is the very last member of the current Bush/Fed group that you would want as Treasury Secretary. In fact, Obama should NOT appoint any current member of the Bush/Fed band of incompetents to any capacity within the new administration.
Correct. There are different cases to be made about whether Lehman's failure was good or bad in the long run. The "good" side generally relies on the notion that the asset deflation underlying our problems was so bad that it was better for the pain to come earlier, so that policymakers could realize how serious the problem was-- if it had not failed all at once, the pain would have come slowly and gradually. In this line a dramatic failure "woke up" the government and the public to take drastic action.
However, I tend to agree with this analysis:
And this:
To the extent that Geithner was involved in the decision to allow Lehman to fail, the subsequent attempts to take the blame off the Treasury by claiming that (1) they tried to save Lehman, but couldn't get a private buyer even with government support (2) they would have saved Lehman, but it was illegal, and the poorly thought out original TARP proposal to buy banks' bad assets instead of direct capital infusions into banks, he was involved in a large number of mistakes.
Sometimes to fix something you need to bring in someone with an outside perspective. So why Geithner? One reason may be that Obama is in way over his head, and has no choice but to listen to the "smart people" e.g. Summers, Paulson, Bernake, etc. who are all telling him Geithner. If you don't know what you're doing, go with the safe choice.
