In a 5,000-word, front-page profile in today´s New York Times, Treasury Secretary Timothy Geithner faces a chorus of critics on his behavior as the president of the Federal Reserve Bank of New York as well as his ideas for a rescue of the financial system.
There are some surprises among the voices, however; a few normally caged birds now sing and one current regulator seems to squawk especially loudly for someone who must technically still view Geithner as a superior. What of the Times´ sources?
The loudest among the group is Comptroller of the Currency John Dugan. He debuts high up in the story´s first few paragraphs, reminiscing on Geithner´s proposal to guarantee bank debt-apparently a shocker when it first came out:
"'People thought, "Wow, that´s kind of out there," ' said John C. Dugan, the comptroller of the currency, who heard about the idea afterward."
Dugan also told the Times about Geithner´s support for a plan that would have allowed banks to reduce their capital - an apparent reference to Basel II capital standards.
It seems probable officials at the Federal Deposit Insurance Corp. weren´t too shy about criticizing Geithner either. Though FDIC Chairman Sheila Bair isn´t quoted directly in the story, the article appears to demonstrate an in-depth knowledge of her positions, including the fact that she never really wanted to use the agency to issue government-guaranteed debt in the first place. Bair first publicly voiced those concerns Monday afternoon, after the story had already run. (It also detailed a fight Geithner had with Bair over whether the FDIC should charge fees to the banks that issue the debt - a fight Bair eventually won).
Perhaps most surprising, however, is that the Times scored Federal Reserve Board Chairman Ben Bernanke. He´s mentioned high in the story, calling Geithner "invaluable" to the Fed´s response to the crisis.
For one, it´s extremely rare for the Fed chairman to give a one-on-one interview on the record. For another, it appears he did so in order to defend his colleague at the Treasury Department, which raises questions about the central bank´s independence. Since last fall when he started working so closely with Geithner´s predecessor, Hank Paulson, Bernanke has been criticized in some quarters for appearing to be far too close to the executive branch - and the fact that Bernanke took time off from his busy schedule to sing the praises of Geithner only serves to reinforce that idea.
All in all, the story could be devastating for Geithner, who as NY Fed chief was portrayed as very close to the Wall Street bankers he was supposed to be regulating. As proof, the story mentions he was offered the top job at Citigroup, a position he turned down. He also had a habit of meeting alone with bankers under his purview:
"While the New York Fed´s rules do not prevent its president from holding such one-on-one meetings, that was not the general practice of Mr. Geithner´s recent predecessors, said Ernest T. Patrikis, a former general counsel and chief operating officer at the New York Fed. 'Typically, there would be senior staff there to protect against disputes in the future as to the nature of the conversations,' he said."