Embattled Treasury Secretary Tim Geithner looms large in John Heilemann's New York magazine piece detailing the Obama administration's increasingly strained relationship with Wall Street. And if his reporting is any indication, the president and the Treasury Secretary still have an ongoing "man-crush" on each other.
Since he took over in early 2009, Geithner has been seen by many as an embodiment of the Wall Street establishment. Heilemann notes that he's been accused of working for Goldman Sachs -- even by members of the mainstream press. (Geithner, a regulator by trade, has never worked for any Wall Street bank.)
Geithner emerged as a candidate for Treasury Secretary after former Fed chairman Paul Volcker, then 81, was ruled out and Larry Summers, the former president of Harvard, was deemed too politically divisive, Heilemann reports. After taking the helm at Treasury, Geithner quickly became Obama's confidant through a combination of his moderate political leanings and a hesitancy to enforce sweeping, broad changes to the financial system. Here's Heilemann:
Indeed, the president's support for his Treasury secretary has been unwavering. (Axelrod would laugh at rumors that Geithner was about to get the boot: "Don't these people realize they have a man-crush on each other?") And Obama's loyalty has been repaid with results. Geithner's stabilization plan is now widely regarded as having worked -- mainly thanks to the once-derided "stress tests" that he imposed on the banks, which showed the world that their circumstances weren't as dire as many feared and let them raise the requisite capital to get back on their feet.
If Geithner is Obama's trusted ear on all matters economic, it may be because Geithner seems to share an overriding belief that the financial industry -- the nation's largest banks in particular -- needed only a certain amount of added regulatory scrutiny. The Obama administration's chosen method to rescue the economy, Heilemann suggests, was to harness the expertise of a well-connected, but centrist financial mandarin like Geithner.
Months later, however, the implications of Obama's philosophical allegiance to Geithner seems to have been made manifest in the Senate's recently passed financial reform bill, which, the New York Times points out, has many in the financial industry breathing a sigh of relief.) Here's more from Heilemann, who has one of the best and most incisive summaries of Geithner to date:
Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system's stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn't need to be rebooted or downsized, merely better supervised.
Read the entire piece at NYmag.com here.