In the wrangling over the bill on Capitol Hill this winter, the role that Summers played—shimmying it through the House, tweaking it to make it more acceptable to the Senate—was pivotal. The end product drew criticism from the left and right, but in size ($787 billion) and broad outline, the bill was close to what Obama originally put forward. “People can quibble on the details,” says Austan Goolsbee, a member of the Council of Economic Advisers. “Republicans say that it should have had even more tax cuts. Others say that it should have had more infrastructure spending. But what’s not under dispute is that in the first four weeks of the presidency, we passed the biggest stimulus package in American history.” End of story.
The passage of the stimulus package was, no doubt, a significant victory for Obama, Summers, and the rest of the economic team. But for Geithner, the triumph coincided with the start of what would be for him a long and brutal stretch. For on the same day that the Senate passed its version of the stimulus, thus essentially guaranteeing its enactment, Geithner delivered his maiden speech on the Obama plan to save the banks.
Until that moment, the praise for Geithner—from his colleagues, bankers who’d been regulated by him, and other denizens of the financial world—had been extravagant. Genius was a word frequently employed. So was superstar. “I went through battle after battle with Tim, and he’s quite remarkable,” says a former Treasury official from the Paulson era. “He’s a very strong leader. He’s smart, he’s tenacious, he works harder than anyone. There were countless times when Paulson and Ben Bernanke were focused on academic discussions and Tim was the one who brought things back to reality.”
Yet even as Obama was weighing giving Treasury to Geithner, some skeptical voices were heard, especially among players in the financial markets who believed that, in a time of crisis, a grayer head of hair was warranted. (Some suggested putting former Fed chairman Paul Volcker in the job for a year, with Geithner as his deputy and successor in waiting.) “I have great respect for Tim,” says one of them. “But I thought he lacked the gravitas for the job, the ability to be a commanding figure, to get on TV and have people take one look at him and say, ‘Yeah, he’s the man.’ ”
Not even the most ardent Geithner skeptics could have predicted the disaster that was his February 10 speech, however. Speaking slowly, as if he were on a mild sedative, swaying side to side, his eyes darting from left to right as he labored to read from the teleprompters flanking the podium, Geithner gave a performance positively McCainesque in its degree of maladroitness. And that may have been, lordy, lordy, the least bad thing about it. The night before, at his own press conference, Obama had said that Geithner would “be announcing some very clear and specific plans for how we are going to start loosening up credit once again.” And: “I don’t want to preempt my secretary of the Treasury; he’s going to be laying out these principles in great detail tomorrow.” And: “I’m trying to avoid preempting my secretary of the Treasury, I want all of you to show up at his press conference as well; he’s going to be terrific.”
But Geithner offered precious little that was specific and provided few details. Obama’s raising of expectations would have been ill-advised under any circumstances. But these were not just any circumstances. “Tim and Barack might have been able to get away with ‘Trust me on the details’—except that they were following Paulson, who asked to be trusted so many times and then changed directions that no one was going to trust any Treasury secretary on the details,” remarks a senior executive at one of Wall Street’s biggest banks. “And then here comes Tim and says, ‘Trust me on the details.’ Oy vey.”
What had happened was that Geithner, after weeks of working on the plan, changed his mind late in the game and decided to pursue a different path. Without time to craft fully the new strategy, he concluded that vagueness was preferable to providing details that might have to be altered later. One problem, though: Apparently no one told Obama.
The torrent of abuse that rained down on Geithner was withering and ceaseless. In something like a heartbeat, he became in the eyes of the financial community—which, for all its lunacy, stupidity, avarice, and culpability in the current financial implosion, remains for any Treasury secretary a constituency of paramount importance—something between a bad joke and a calamity. The situation was exacerbated by the paucity of senior staff at Treasury, which has made it nearly impossible for Wall Street to talk to Geithner’s shop: “There is no one there to answer the phone,” says one executive. “Literally.”