Geithner

I have just watched Tim Geithner on two different Sunday morning shows, interviewed on Meet the Press and on This Week With George Stephanopolis.

And I was very impressed with Geithner. Unlike snippets of his testimony and news clips, where he often seemed not very clear or articulate, he was clear, crisp, thoughtful, and confident.

I have to change my prior criticism that placed him in the group with "Wall Street DNA," unable to think outside that box. He corrected this misperception, saying that he has worked his entire career in the public sector. He has never worked for a bank, and every plan he has advanced regarding banks was not to benefit banks but to allow them to do what will benefit the people and small businesses.

He spoke of needing to get banks to take risks so they will make loans again. They took too much risk that got us in trouble, but now the problem is that they're too unwilling to take risks and make even good loans. The toxic assets plan is an incentive to lure private investors in who will take some risk, the government will take some risk, and banks will start lending again.

In answer to criticism that it's a boondoggle for investors who make a small risk and the government will absorb most of the losses, he says that, if it doesn't work, the government would have even more losses if it tried to do it without private investors. And if it does work, the government (tax payers) gain.

His plan is a middle course between those who want to let the banks fail, take them over and restructure them, and those who think we should nationalize on a much bigger scale. He agrees that the danger is that we do too little, are not aggressive enough; but, unlike Paul Krugman who calls for a much bigger government plan, he says that Obama has to consider what members of Congress will go along with.

So, as of today, I return to thinking Obama made a good choice and I will give him the benefit of any doubt and time to prove that he's right. Now, my reservations about Summers remain: he's very smart but steeped in Wall Street DNA.

Ralph