Geithner on the Hot Seat
Today is Timothy Geithner’s turn in the spotlight, as his confirmation hearings to become treasury secretary begin. The New York Times asks economists and other experts for some questions lawmakers ought to shoot at Geithner. Some excerpts:
Ordinary taxpayers would like an answer to this question: Why have they been billed more than $45 billion to rescue Citigroup from failure when, as president of the Federal Reserve Bank of New York, you were its primary supervisor? Three major problems led to Citigroup’s downfall: bad investment policy; overexpansion, which overwhelmed Citigroup’s management; and an inadequate capital base. Why was Citigroup’s supervision inadequate to deal with these problems?
How do we more effectively regulate the financial services industry without adding unnecessary regulations that cripple our ability to compete globally?
I’d like Geithner to lay out honestly, and in clear terms, exactly how bad the mess we’re in has gotten – and how scared we should be. Judging by Wall Street’s reaction on Tuesday to mounting bank troubles, this is a crisis that’s getting worse by the day. To earn the trust of Americans, Geithner needs to go on the record here, and begin offering the kind of transparency that has previously been missing.