Andrew Ross Sorkin in today’s New York Times lets Wall Street CEOs (of all people) snipe anonymously at Tim Geithner, Obama’s choice for Treasury secretary. His news colleagues and Bloomberg, meanwhile, have straightforward news stories that are much more positive toward the appointee.
Here’s Sorkin:
But Mr. Geithner’s involvement in several ultimately ill-fated efforts to buttress the American financial system is the very reason some Wall Street C.E.O.’s — a number of whom spoke on the condition of anonymity for fear of piquing the man who regulates them — question whether he’s up to the challenge…
And, of course, Mr. Geithner also oversaw and regulated an entire industry whose decline has delivered a further blow to an already weakened American economy. Under his watch, some of the biggest institutions that were the responsibility of the New York Fed — Bear Stearns, Lehman Brothers, Merrill Lynch and most recently, Citigroup — faltered. While he was one of the first regulators to smartly articulate the potential for an impending disaster, a number of observers question whether he went far enough to stop the calamity.
Sorkin is right to ask pointed questions about Geithner, but channeling Wall Street chiefs who were actually in charge of the businesses about why he didn’t do better at keeping them from running off the cliff? Come on.
Bloomberg presumably talked to a less narrow subset of self-interested sources, and reports—like Sorkin—that Geithner was early to see problems with credit-default swaps, but—unlike Sorkin—it writes that Geithner’s hands were somewhat tied in forcing change.
The big problem Geithner faced in trying to get a handle on the market: It was unregulated, so he lacked authority to make changes on his own and had to depend on his powers of persuasion.
The New York Fed chief began pressing banks in September 2005 to reduce trading backlogs that could prove dangerous should a crisis hit. An average 17 days’ worth of unsigned trades had piled up on dealers’ books, threatening to undermine the market if a wave of defaults hit. A lax system for unwinding and reassigning trades left dealers at times unsure of who was on the other side of their trade.
It took dealers a while to respond. A year later, they had cut the backlog of unsigned trades by 70 percent and doubled the number of deals that were electronically processed.
Sorkin’s counterparts on the news side of the NYT, meanwhile, are too unquestioning in writing about Geithner:
Mr. Ryan, who helped direct the government’s rescue of the savings and loan industry in the 1990s, said Mr. Geithner’s involvement in the current rescue effort would give him an invaluable head start.
“He’s one of a core group of government executives who’s been part of every decision,” Mr. Ryan said.
Well, that hasn’t worked out too well so far, has it?
Maybe Sorkin and his news colleagues can meet in the middle next time.
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.