Geithner It Is!

[Cross-posted at DailyKos]

The Senate has confirmed Timothy Geithner as Treasury Secretary by a 60 to 34 vote. The Democrats joining the Republicans, who mostly opposed this nomination, were Feingold, Harkin and Byrd, also joined by Sanders.

I want to be clear that I support President Obama and I am mostly happy with what he has done since becoming President. But this team of Geithner, Summers and (reportedly) Sunstein, who will have a lot to say about how regulations that govern the the Financial Services industry get reformed, make me plenty nervous about a subject I care deeply about.

During the confirmation hearing the best questions for Geithner came from Senator Bunning of Kentucky, a man who I’ve never thought I had anything in common with. The following four questions and their no-content answers in particular bothered me.

Senator Bunning:

“What steps did you take, if any, to address the risks of the derivatives markets? I do not mean efforts to improve the functioning of the markets, such as the central clearinghouse, but the systemic risks of the products and markets more generally.”

“The New York Fed oversees the Fed’s Large Financial Institutions regulation. Therefore, as President of the New York Fed, one of your most important responsibilities is regulating and preventing the collapse of systemically important banks. And that has been your job since 2003, which means it was your job to watch those institutions during the time they acted most irresponsibly and made the decisions that eventually led to our current crisis. All one has to do is look at the near-total collapse of Citigroup to see that you failed at that job. Why did you fail at that job and why should that not disqualify you from overseeing the entire financial system?”

“What, if any, decisions on interventions by the Federal Reserve or the Treasury during the current crisis did you disagree with at the time? And were there any such decisions that you did not participate in?”

“During your time at the New York Fed, have you disagreed with any of the monetary policy or regulatory actions of Chairman Greenspan or Chairman Bernanke? If so, please explain.”

You can read 102 pages of Geithner’s mostly non-responsive answers to the Senators on the Finance Committee here. It won’t be comforting.

So why did Obama pick this crew. A smart man enamored of other smart men? Was he thinking “It takes one to know one?” Was he thinking, "Who better to fix this mess than someone who has been in the middle of it and now understands what went wrong?"

We can hope.

But the sinking thought I have looking at this gang is, “Here come the 'brightest and best' again, God help us.”

To save you the trouble of wading through the 102 pages of questions from the Senate Finance Committee with Geithner’s answers, I’ve excerpted his answers to the four questions above in order.

“The systemic risks of the derivatives markets were a major focus of my work while I served at the New York Fed – not only to make the infrastructure of those markets more mature and more robust, but also to make sure the institutions at the center of the derivatives markets were managing their risks more effectively. In addition to working directly with the firms that represented almost all of the volume in these markets, I engaged lead regulators from the U.S. and around the world – from the SEC, Switzerland, Germany, France, the United Kingdom, and Japan – to encourage these firms to have a better sense of the risks they were exposed to in credit derivatives as well as their risks from a broad range of other complex financial products. These efforts, I believe, helped make the system stronger.

Nonetheless, we will have to take a broad look at the framework that surrounds derivatives and incentives created for institutions that participate in these markets.”

“There were systematic failures of risk management and supervision across the financial system, and addressing these failures will require comprehensive changes to financial regulation here and around the world. As President of the New York Fed, I led a number of initiatives to strengthen the financial system ahead of this crisis. Those efforts were important and effective in addressing many of the weaknesses at the center of past financial crises, and they helped limit the damage caused by the present crisis. But those efforts were inadequate.”

“The decisions over this period often had to be made quickly, and on the basis of much less information than one would like to make public policy judgments of this magnitude. With time we will be able to look back and undertake a more meaningful assessment of these judgments, and doing this carefully and thoroughly will be a critical part of designing a system that will be more robust and less vulnerable to the type of situation in which we find ourselves.”

“As Vice Chairman of the Federal Open Market Committee, I helped shape and supported the monetary policy decisions by the FOMC under Chairmen Greenspan and Bernanke. I also helped shape regulatory policies over this period, although those policies are the responsibility of the Federal Reserve Board.”

We’ll soon find out. Is he a man who understands the problems through and through and just didn’t want to tip his hand in a confirmation hearing? Or is he a bloodless technician excited about having a complicated problem to work on, who can answer complicated questions without ever bothering to have his own beliefs?

To me it sound like "errors were made" all over again.