Stress Test By Timothy F Geithner

Like the collapse of one investment bank triggering a run on all investment banks, this would have triggered a run on the other struggling EU countries like Italy and Spain . All things that shook market confidence and threatened market confidence and made the panic/crash much worse. I think theres a compelling case to be made that the EU never really recovered from the crisis.

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Stress Test: Reflections on Financial Crises

I know I should keep up with current events more but I’m content to keep my head in the sand. I’m sure this book would be over my head since I haven’t kept up with any political news. But the securities and derivatives that were the cause of Bear’s woes only became less valuable as the underlying sub-prime mortgages that were to fund them began to default. Real estate prices crashed as many foreclosed properties came on to the market. The next big financial institution to face insolvency was Lehman Brothers, an even bigger investment bank than Bear Stearns.

I loved the quips about the populist Republican establishments, even though you can clearly tell he still holds true to his early registration as an Independent because he states the facts, doesn’t care about politics, and served a higher good. This work symbolizes the attitude and dedication every public service member should have and also warns what can happen without such a mentality. At first, it started lightly with Geithner’s experience in the Treasury literally working his way up from being a “noisy scribe” to dealing with the economic panics in Asia in the 90s to eventually being dragged to Secretary of the Treasury.

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This gave him invaluable working experience in the Asian financial crisis, as well as the Mexican peso crisis. It also allowed him to forge some understanding between himself and President Obama that appealed to the President-elect when selecting Geithner for Treasury.

Stress Test: Reflections on Financial Crises

Well, for starters it leaves me with a great deal of respect and admiration for Geithner and his team. Secondly, it leads me to think that there has been a lot printed about the Great Recession, Bear Stearns, Lehman Brothers, Citi, and BoA, but not much of what has been printed recounts what transpired as well as thus memoir does. Finally, it is worth noting that the Epilogue, “Reflections Moneyball: The Art of Winning an Unfair Game Review on Financial Crises,” is a superb assessment of lessons learned and a blueprint for what might be done in the future. I think this book ought to be mandatory reading for every member of Congress. But, even that is problematic because I think only about a third of them might begin to understand it. Timothy Geithner has not written the typical Presidential Cabinet Secretary memoir.

About Timothy F Geithner

We may not use the methods Geithner used to repair the damage in the future, but everything he did will be considered in the next crisis, combed over and debated, regardless of political affiliation and ideology. This is because pragmatism really does trump ideology in a crisis, no matter what the pundits and politicians say. Geithner was the head of The Fed when the crisis first broke and later became Secretary of Treasury under President Obama.

He details the behind the scenes of what was the worst economic and financial crisis since The Great Depression. While some of the content was over my head, for the most part Geithner does a great job explaining what happened in a tangible and easy to understand way.

Geithner opens the book essentially with an apology for his horrible confirmation testimony during Congressional hearings and his horrible roll-out of his plan to stress-test the banks. Behind the scenes, he tells of staffers working late nights on speech drafts, but he seems oddly detached and uninvolved in this process. Geithner felt a “crushing guilt” for making the President look bad and embarrassing his family. His wife is apparently a counselor and loathed Geithner’s political role and the long hours he spent away from home. She opposed him accepting the nomination as Treasury Secretary, and President Obama had to personally assuage her doubts when he decided to keep him on after re-election. I found Geithner’s childhood interesting as he grew up as child of USAID worker in SE Asia. He developed a broad world view and studied in China, and later leveraged that experience to land a job in the international wing of the U.S.

Stress Test: Reflections on Financial Crises

It means that this book is not written by a politician, trying to skirt around difficult subjects and personalities, worried about either offending someone or possibly having negative political repercussions come in the future. That is because Geithner, Barack Obama’s first Secretary of the Treasury, is not a politician nor a Washington insider. The result is a refreshingly candid autobiography, full of personal anecdotes, self-criticisms, and criticisms of those that he had to work with in some capacity or another. I think Secretary Geithner’s book reflects humility and balance in that Foreign exchange reserves he acknowledges the mistakes that he and other senior government finance and economics officials made during the crisis (US Treasury, Federal Reserve Bank of NY and Board of Governors – Federal Reserve System). Histories of the financial meltdown in we have heard before, but what we learn from Geithner’s personal history is how the crisis looked from his desk, what he was thinking, who he was talking to, and how, as the crises widened, his perceptions changed or crystallized. This type of meltdown crisis will probably happen again, especially if our political system continues to fail.

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For the sake of this review, I’m going to focus more on the style and overall content of the book, since I’d hate to dwell on all of the nuances. Ultimately this book left me feeling better about the Obama administration and their response to the crisis. I agree that we passed our “stress test” but its important to remember the lessons learned because the next crisis is always around the corner. There will never be a world without fires, so good firefighters are essential. Despite how bad this whole thing makes the US system work Geithner concludes that the system more or less did it job. They constantly made it look like they were going to let Greece default or haircut Greek bondholders.

Stress Test: Reflections on Financial Crises

Politics also made reforming the financial system very difficult. Geithner details all the log roiling and handouts to corporate donors key political leaders demanding in exchange for their vote. He also talks about how well the government bureaucracy fought changes that would consolidate departments and make the regulatory system more efficient. Ultimately reform did make some useful changes, but it the bill is far from perfect and leaves a lot of problems unaddressed. Ultimately legislation is the art of the possible and a great bill just wasn’t possible. The classic way to stop a panic, lend to healthy institutions that are temporarily cash crunched, looks like a bank bailout. I think one of the fundamental takeaways from this book is that by and large, banks were NOT bailed out.

Review Of stress Test: Reflections On Financial Crises By Timothy F  Geithner

Geithner writes that he and his staff strove mightily to save Lehman, but they could not find a willing or able buyer and had no other statutory weapons to effect a rescue. Lehman filed for bankruptcy, and roiled the financial markets for months thereafter. Department of the Treasury and previously served as President and Chief Executive Officer of the Federal Reserve Bank of New York, from 2003 to 2009. He wrote this book as a distinguished fellow at the Council on Foreign Relations and is now president of Warburg Pincus. The most widely respected CEO in America looks back on his brilliant career at General Electric and reveals his personal business philosophy and unique managerial style. Nearly 20 years ago, former General Electric CEO Reg Jones walked into Jack Welch’s office and wrapped him in a bear hug.

  • In a candid, riveting, and historically illuminating memoir, he takes readers behind the scenes of the crisis, explaining the hard choices and politically unpalatable decisions he made to repair a broken financial system and prevent the collapse of the Main Street economy.
  • Stress Test reveals a side of Secretary Geithner the public has never seen, starting with his childhood as an American abroad.
  • As president of the Federal Reserve Bank of New York and then as President Barack Obama’s secretary of the Treasury, Timothy F. Geithner helped the United States navigate the worst financial crisis since the Great Depression, from boom to bust to rescue to recovery.
  • This is the inside story of how a small group of policy makers–in a thick fog of uncertainty, with unimaginably high stakes–helped avoid a second depression but lost the American people doing it.
  • Stress Test is also a valuable guide to how governments can better manage financial crises, because this one won’t be the last.
  • He recounts his early days as a young Treasury official helping to fight the international financial crises of the 1990s, then describes what he saw, what he did, and what he missed at the New York Fed before the Wall Street boom went bust.

Furthermore if anyone thinks that dealing with congress of the overlapping/balkanized American regulatory environment is bad, dealing with all the different EU countries must be hellish. Without a centralized fiscal/regulatory union, I think the European project is going to remain stalled out and will eventually collapse. If any one country can effectively veto the response, its only a matter of time till the whole thing blows up.

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While the gov did by some toxic assets and promise some banks against loses , its really impossible to price assets that the market will not buy so purchases were really hard to organize. This made capital injections much easier/faster and showed everyone that the government is standing behind the system. You don’t need to pull your money cause these banks wont be allowed to fail. And here we come to the role of government in fighting a the financial fire. The right thing to do is pump liquidity into the system at all costs.

Those readers that are not as familiar with financial derivatives, risk management and other banking terms may have a tougher go at this. However, it is one thing to say that one can study Finance, it is another to say one has experience with Finance. I also came to understand another factor that fueled the Tea Party movement, which gave rise to President 45. Second, I heard Ky Rysdall interview Mr. Geithner on Marketplace before I read the book and I was very impressed with Mr. Geithner’s recollections of his roles in , and his concerns about the current state of the financial ecosystem. After I heard the interview, I immediately checked the book out of the library and started reading.