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Timothy Geithner: On the Money
If last year’s bailout of the financial industry caused you to start muttering words like investment banker and robber baron in the same sentence, it may cheer you to know that Timothy Geithner, the man responsible for crafting much of that bailout, agrees with you. “I am,” he says, seated in his Washington, D.C., office, an intimidatingly ornate room worthy of a Hogwarts headmaster, “incredibly angry at what happened to our country.”
It’s surprising, in a way, because Timothy Geithner, the seventy-fifth Secretary of the U.S. Treasury, doesn’t seem that angry. A lithe and athletic 48 years old, Geithner, who was named one of the 100 most beautiful people of 2009 by People magazine (it may have helped that his brother works for the publication), has the kind of looks that can go either way: Half an inch one way he’s John F. Kennedy; half an inch the other he’s Lyle Lovett. In person, he’s friendly, relaxed, and prone to making jokes at his own expense—the first thing he tells me when we sit down is how much “shit” he’s going to get from his friends for doing an interview with VOGUE.
Indeed, one of the more remarkable aspects of Geithner’s meteoric rise may be his affability. In Washington, nice guys don’t always rise to the top. As former Treasury colleague Joshua Steiner, now co-head of a firm that oversees New York mayor Michael Bloomberg’s fortune, says, “He’s atypical for Washington because he has never been a schemer and always maintained a sense of humor about himself. The jobs he’s held can be a real mixture of the absurd and the meaningful—one minute, you’re in the room discussing complex matters of state, but if you miss the motorcade to the airport after the meeting, you’re stuck. One wrong turn at the Kremlin, you’re lost. Tim gets that.”
The people closest to him this past year—the ones who watched as he worked fifteen hours a day, forsaking time with his wife and two children, sometimes sleeping and showering at the office in order to get to his desk early—say the calm exterior belies the truth of Timothy Geithner, who is very smart, very angry, and more than a little relieved that the economy did not tank further than it has. Indeed, as bad as things look today, it could have been worse. A lot worse. “We were starting to have a classic bank run, people were starting to take their money out of banks, something that hadn’t happened since the Great Depression,” he says, defending the initial decisions in the crisis, some of which have started to smell a little foul with the passage of time (particularly the generous terms for AIG’s bailout). “The things we had to do early to fix the financial system were really important, and we got them basically right. Nothing else was possible without them. The reality is that financial crises are unfair and cause huge damage to innocent victims, but it would have been more unfair not to act aggressively because it was unpopular.”
Wall Street, for the most part, agrees with Geithner’s self-assessment. “Geithner is seen as smart and a straight shooter,” says Wall Street Journal economics editor David Wessel, whose book In Fed We Trust is one of the better accounts of the crisis. “It was good to have somebody in there initially who understood the difference between a stock and a bond, but that continuity has become a political liability now because he is seen as a friend to Wall Street. If mistakes were made at AIG, he can’t say it didn’t happen under his watch. He was at the scene of a lot of car accidents, even if he didn’t cause them.”
As the Obama administration’s point person for a cratering economy, Geithner knows a thing or two about unpopularity. Between the blogosphere and some of the more liberal publications, the off-with-his-head rhetoric has been pretty heated, something that fills his more loyal lieutenants with a sense of injustice. “I think we can all agree that this is the hardest thing any of us have ever done,” says Treasury senior counselor Lee Sachs. “The intensity, the consequences, the lack of a road map, the fact that three minutes after an announcement you are seeing the reaction live on CNBC—it’s almost unprecedented.” The televised babble has became so bad at times, Geithner’s own mother thought about watching TV with the volume turned down. “When he first took the job, he said he was so sorry to put us through this,” says Deborah Geithner, a piano teacher who lives on Cape Cod with her husband, Peter, a retired director of the Ford Foundation’s Asia programs. “I said, ‘Don’t worry about it; our pride in you will overcome everything.’ But as a mother, I’ll tell you, it has been hard.”
At one point, the vitriol against him got so bad, the ranking House Republican on the Joint Economic Committee asked the secretary point-blank to resign. Geithner deflected the attack with admirable equanimity, but weathering the constant criticism has taken a toll. Geithner’s wife, Carole Sonnenfeld Geithner, a therapist who specializes in grief counseling, often tells him he’s not showing enough emotion toward people suffering in this economy, but once you’ve mastered the stoicism to endure a face-to-face insult, it can be challenging to switch gears to empathy for the unemployed or outrage for the venal. “Let me tell you what I tell my wife,” Geithner explains. “What you say in these jobs is very important, and it takes a lot of discipline and care not to be provoked or react. The price of doing that is masking a lot of emotion. I understand that people want to understand you and get a feel for who you are. But it’s hard to do that in the political theater of a congressional hearing.”
For the record, he has actually lost his temper. The most famous expletive-laden incident (as reported by The Wall Street Journal) occurred during a Washington meeting in which certain regulatory agencies were said to be jealously guarding turf instead of working for the common good. Less famously, and more poignantly, the angriest he has ever been was probably the afternoon a camera crew for Jon Stewart’s Daily Show showed up unexpectedly at his house in Larchmont, New York. The story they were covering was ripe for satire—even the Secretary of the Treasury was having trouble selling his $1.6 million mock-Tudor house in a deflating housing bubble—but Geithner’s teenage children, who were home alone at the time, had not been let in on the joke. When a camera crew pulled up, they called their father at his office, terrified. “I’ve never seen him so mad,” one aide remembers.
To this day, Geithner’s wife, whom he met when they were both students at Dartmouth, doesn’t speak to reporters. Next year, she is publishing her first book, a young-adult novel dealing with grief issues, but, according to one source, has insisted the Geithner name not be used in its promotion. “Carole is not introverted,” says Joshua Steiner. “She’s a very warm and generous person; she just doesn’t want to see their life splashed about on a magazine page.” Geithner’s parents concur. “They have a wonderful marriage,” says Deborah Geithner, “and I know Carole is proud of his service to the country, but she and Tim are protective of their privacy as a family.”
For Geithner, an especially irksome aspect of the attacks is the many inaccuracies, starting with the notion that the secretary, who was head of the New York Federal Reserve when the crisis began, is somehow responsible for its origins. “Think of all the stuff that burned first,” he says. “Fannie and Freddie, the investment banks, AIG, the monoline insurance companies—it was their collapse that brought the system to the point of panic, but those things were outside the scope of the Fed’s jurisdiction. They all got dumped on us when they went bad, but we had no authority up front.”
What probably rankles most, however, is the notion that Geithner himself is motivated by a desire to cozy up to Wall Street. When he was interviewing for the job at the New York Federal Reserve, he was asked if he would be willing to be a presence on the New York social scene, the way his predecessor had been. He answered no. The perks of fame don’t interest him much. On a recent business trip, Geithner and his entourage were trying to decide where to eat dinner. An aide suggested a popular restaurant, but Geithner nixed the idea, saying they’d never get a table. The aide laughs at the memory: “I mean, he’s the Secretary of the Treasury! He could get a table.” What little free time he has, he prefers to spend with his children, building a ramp in the driveway for skateboarding, surfing off the coast of Cape Cod, building a guitar by hand with his teenage son, or reading—a recent title on his Kindle is The Places in Between, Rory Stewart’s account of walking the length of Afghanistan.
To the great chagrin of the country’s progressives, many of Geithner’s aides have worked for companies that either received government money or benefited from guarantees provided by it—his own chief of staff was once a lobbyist for Goldman Sachs—but Geithner himself has never passed through that revolving door (though he is said to have been sorely tempted by an offer to run Citibank). Most of his career has been spent in public service, something you’d hardly know from listening to his critics. “When I started this job, I think half the Democratic caucus thought I had been a hedge-fund manager my whole life,” he says. “I was testifying at a hearing once, and a member of the panel said, ‘You were a banker,’ and I said, ‘No, I have never been a banker.’ And he said, ‘Well, you were an investment banker,’ and I said, ‘No, I was never an investment banker,’ and he said, ‘Well, you look like a banker.’ ” (For the record, Damon Silvers, the panel member at the hearing, never said he “looks” like a banker —but, point taken.)
Geithner looks like a banker only if you buy the anachronistic view of Wall Street populated by New En-gland WASPs. Those days—if they ever truly existed—are long gone. Wall Street today is an industry driven by profits for its shareholders. Growing up in Africa, India, and Thailand, places where extreme poverty was an inescapable part of everyday life, Geithner never developed an appetite for extreme wealth. His wife is a clinical social worker; his children went to public school. He wears off-the-rack Brooks Brothers suits and a black rubber watch and tools around Cape Cod (where he and his siblings inherited their parents’ summer house) in a 30-year-old Boston Whaler. If you’re invited to the Geithners’ for dinner, the secretary himself will probably have cooked it. Barefoot.
He may have his flaws, but cupidity is not one of them. In fact, the move to the Treasury job from his previous position at the New York Federal Reserve meant more than a 50 percent cut in his salary. Indeed, the greatest misstep of Geithner’s otherwise charmed career—his flawed tax returns dating back to his days at the International Monetary Fund—stems from an attempt to be frugal. Instead of paying an accountant to prepare his taxes, Geithner did them himself using TurboTax, a tax-preparation software program not designed to account for the way international companies pay their American employees. (As a self-employed person myself, I could have told him he was responsible for the entire Social Security tax!) It may be hubris to think you’re smart enough to do your own taxes, but it’s not criminal.
Given his background, he’s found it a bit galling to have his motivations questioned. “For the first time in my life,” he says, “all my judgments are being seen through this prism that I am somehow here to protect and defend this industry”—the financial sector—“even though I am constantly in a fight with them. They think I am being too tough on them with reform. They complain we don’t listen to them. Once those perceptions harden, it’s very hard to dig your way out of them.” But Geithner doesn’t want to dwell on the negativity. “You can’t do these jobs worrying about perceptions. You have to focus on improving real things that matter. To consider what is popular will lead you astray, and you will have no integrity to do the important things that will make the country stronger.”
Having been around the financial industry as long as he has, Geithner has no illusions about its ability to reform itself. “I don’t think we can change Wall Street by exhorting and shaming,” he says. “There is an inherent conflict in the financial system between its basic interests and what is necessary for the stability of the economy and protection of the public. That is why we have rules, but the rules were not well designed. They lagged dramatically and tragically. So we have to fix the rules. That’s what we’re doing with reform.”
It won’t be an easy fight. The banking lobby has already spent millions to defeat the financial-reform legislation proposed by the administration, but Geithner, who admits to being torn between affection for idealists and respect for pragmatists, is ready for the fight. He has been accused of being a technocrat—someone too embedded in the system to envision systemic change. But like it or not, the language of government legislation is now so complex and so exhaustive (I defy any normal citizen to wade through the average “white paper”), it will take someone with Geithner’s skill and background to see any of those changes become a reality. “In the end,” he says, sounding very much like his political hero, Lyndon B. Johnson, “it’s not about what you believe. It’s about what you can achieve.”
