It’s been apparent for a good while that Obama is a weak president.
But so weak that his own people ignore what he tells them to do? That’s a whole other thing.
The Associated Press got hold of Ron Suskind’s new book on the administration and writes this lede:
A new book offering an insider’s account of the White House’s response to the financial crisis says that U.S. Treasury Secretary Tim Geithner ignored an order from President Barack Obama calling for reconstruction of major banks.
That’s a wow. Obama ordered Geithner to draw up a plan to nationalize (or at least seize–the AP’s word is “dissolve”) major banks—Citigroup is the only one named here—and the banks’ man in the White House (one of them, anyway) ignored the president. Instead, Treasury converted its preferred shares in Citigroup into riskier common stock, bailing it out for the third time and preserving the bank’s management, its $2 trillion balance sheet, and its coveted status as too big to fail threat to the global economy.
Obama’s reaction on finding out about Geithner’s insubordination (emphasis mine):
The book states Geithner and the Treasury Department ignored a March 2009 order to consider dissolving banking giant Citigroup while continuing stress tests on banks, which were burdened with toxic mortgage assets.
In the book, Obama does not deny Suskind’s account, but does not reveal what he told Geithner when he found out. “Agitated may be too strong a word,” Suskind quotes Obama as saying.
For a president already facing long odds to get reelected with a depressed economy and 9 percent unemployment, this could be damaging politically. Americans will put up with a lot of things in a politician, but they won’t tolerate weakness. If you can’t face down the people on your own team—whom you hired—how are you going to do battle with the powerful interests that oppose you?
“The Citbank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president’s authority was being systematically undermined or hedged by his seasoned advisers,” Suskind writes.
I don’t have the book, but The New York Times confirms the AP’s reading on the Geithner issue, and it implies that the Citigroup wasn’t the only issue on which the Treasury Secretary did his own thing:
Some decisions, including one to overhaul the debt-ridden Citibank, were carried out sluggishly or not at all by a resistant Treasury secretary, Timothy F. Geithner, according to the book.
Obama was last seen asking Geithner, who had been considering leaving, to stay on as Treasury secretary.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.