Noam Scheiber has an interesting if (perhaps inevitably) inconclusive article in The New Republic on “What’s stopping Tim Geithner?” It begins:
In June 2007, Tim Geithner, then the president of the New York Fed, gave a speech about the financial crisis he’d helped defuse as a Clinton Treasury official in the late 1990s. … Geithner referred to the approach he and his Treasury colleagues (among them Larry Summers, now the top White House economic adviser) adopted as a “Powell Doctrine applied to international finance–the overwhelming use of force, with a clear strategy for resolution.” He elaborated: “Very substantial resources were deployed in support of the recovery efforts, and a large share of the resources was made available upfront, in order to try … to stem the loss of confidence.”
When Geithner’s first major speech as Treasury secretary addressed our current financial crisis, many who’d followed his career wondered what had happened to the Powell-like principles. Sure, some of the rhetoric was similar–as when Geithner warned that “[t]here is more risk and greater cost in gradualism than in aggressive action.” But, with Geithner’s hazy details and pointed refusal to ask Congress for more money, little about the plan seemed “overwhelming.”
Scheiber speculates that what’s holding Geithner back is mainly political reality: Congress and the general populace are sick to death of putting money into the banking system, and applying the Powell doctrine would cost a lot. So Geithner’s first trying to persuade us all that he can be trusted by being very cautious and deliberate. But the lack of bold action is only making the situation worse.
I’m still harboring the hope (based on no evidence whatsoever) that Geithner has more up his sleeve than that. As Alex Blumberg says at the very end of his and Adam Davidson’s wonderful “Bad Bank” segment on This American Life last weekend:
Of course, if they were planning to take over the banking system, they wouldn’t announce it beforehand. They’d probably say exactly what they’re saying right now, at least until they got everything set up, they hired enough people, put all their plans in order. And then one Friday evening they’d make an announcement, and nationalize the banks over the weekend.
I should mention that Scheiber has his own econoblog now, “The Stash.” He’s clearly still in the honeymoon phase with it, putting up four or five meaty posts a day (such as this Q&A with unapologetic former AIG boss Hank Greenberg). Enjoy that while it lasts.