Treasury Secretary Timothy Geithner described the nation's financial crisis as "deeply unfair" to average Americans Tuesday, during an interview with Rachel Maddow. Geithner told Maddow that because of American suffering, he felt a "deep sense of responsibility" to reform the nation's financial system:
GEITHNER: I think this is a just war. I think it's a necessary and important thing to do. I think we have a deep obligation to get them to do this. The president has put out a sweeping package of reforms, strongest reforms we've contemplated as a country since the Great Depression, necessarily so because this was so damaging.
The House passed a bill very close to what the president proposed. Senator Dodd has put out a very good, strong bill. I do not think this is a Democratic or Republican thing. This is an American thing. I think you're going to see -- when this gets to the Senate floor, I think you're going to see a lot of support for this, because I think it's very hard for people in Washington to look their constituents in the eye and say, we've just had the worst financial crisis in generations, but we couldn't find the will as a country to reform the rules of the game.
While Maddow began her interview asking about financial reform, the most notable moments came when she told Geithner that she was "concerned" about the Fed and Geithner's former role at the agency. Maddow wondered why Geithner hesitated to press for reforms at financial institutions rescued by taxpayers during his tenure as chief of the New York Fed.
MADDOW: That issue of how much authority you have, though, is where I get hung up, and why I'm still concerned about the Fed now, why I'm still concerned about you working at the Fed, frankly.
GEITHNER: Really, I'm happy -- you can go back over my record. I can tell you, with a lot of knowledge, of course, the stuff we were right on early, the stuff where we made a lot of difference early. But I can also tell you -- and I know a lot about this -- where the Fed was behind the curve and late. The best example of that was the Fed did not use its authority to write rules to provide better protection for consumers like in mortgages early. The chairman of the Fed has said that openly. I agree with that. That's why we proposed to take that authority away from the Fed, and give it to an agency where the people wake up every day, and they think about one thing, which is how to protect consumers.
Earlier in the interview, Maddow essentially asked Geithner "where were you?" during the crisis, and what he wished he had done differently in New York.
Geithner defended the agency saying that it "did a very good job" and acted early to "try to bring a bit of order to derivatives markets," though ultimately he acknowledged that the crisis was a tragic failure of government and that the New York Fed could have done more. He accepted limited personal responsibility, and spread the blame around the agency and the country, using the word "we" to respond to Maddow's question.
Last week, a bankruptcy examiner's report on Lehman Brothers revealed that the investment bank and financial-services firm was able to manipulate its balance sheet despite the fact that New York Fed regulators were stationed within the company. The New York Fed has also been criticized for ordering bailed-out insurer AIG to keep quiet about details of its taxpayer-funded payouts to the likes of Goldman Sachs ($14 billion+), Societe Generale ($16.5 billion), Deutsche Bank ($8.5 billion), and Merrill Lynch ($6.2 billion). Geithner led the agency through both events, though a spokesperson for the agency has said that Geithner "had no role or knowledge of the AIG disclosure matters."
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