We’ve talked a lot about the potentially inappropriate ties between Wall Street and the government. A look at the Treasury Secretary’s appointment calendar does absolutely nothing to dispel the suspicions.
The Associated Press obtained Tim Geithner’s calendars as part of a Freedom of Information Act request. The AP says that in the first seven months of his tenure, Geithner had at least 80 contacts with Goldman Sachs CEO Lloyd Blankfein, JPMorgan’s Jamie Dimon and Citigroup’s Chairman and its CEO. More from the AP:
Geithner had more contacts with Citigroup than he did with Rep. Barney Frank, D-Mass., the lawmaker leading the effort to approve Geithner’s overhaul of the financial system. Geithner’s contacts with Blankfein alone outnumber his contacts with Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee.
Partly this is explained by the extraordinary clout of these companies. Goldman, JPMorgan and Citigroup are among the dominant players on Wall Street. Their executives can move not just markets but entire economies. Treasury invested heavily in all of them to keep the industry afloat.
But size does not tell the whole story. Treasury has a huge financial stake in North Carolina-based Bank of America Corp., but CEO Ken Lewis appears on Geithner’s calendars only three times. Morgan Stanley CEO John Mack also appears three times.
Geithner has a special relationship with Goldman, JP Morgan and Citigroup from his days with the New York Fed as Wall Street’s top regulator. MIT economist Simon Johnson points out the problem with keeping the boys club together:
“Your worldview in the middle of a crisis depends on whom you talk to and what their perspective is, and you need a broad cross-section of opinions to truly understand what’s happening,” Johnson said.
By seeking information from such a narrow group of contacts, Johnson said, Geithner risks limiting his exposure to the views of his trusted banker colleagues.
Geithner must believe he can set aside their inherent biases, he said, adding, “I don’t see how you do that.”
TARP watchdog Elizabeth Warren has her own suspicions. In this interview with the Washington Post, Warren is asked why the Treasury had a different approach in dealing with the car companies versus the banks:
I wanna understand. If it’s taxpayer money on the line, if these are described as systemically significant institutions and that’s the reason for coming in, did he think the banks were better run?
The Treasury Department on behalf on the taxpayer was tough in dealing with the auto industry… They were not tough with the banks, and I want to understand why.
The government’s defense is, of course, that the banks’ failure would’ve been much more catastrophic. But it probably didn’t hurt that Geithner’s calendar was wide open to them.
The entire interview with Warren: