Lunchtime Must-Read: Jennifer Taub: What Tim Geithner Got Right

Jennifer Taub: What Tim Geithner Got Right: “I believe Mr. Geithner correctly recognized that restoring bank profitability…

…could be hastened by undermining efforts to rescue homeowners. What he got wrong was choosing banks over people. Mr. Geithner was right when he told Liaquat Ahamed in an interview published in the New Republic that ‘there is an ongoing political effort to legislate a weakening Dodd-Frank or block political appointees’, but he was wrong when he added, ‘That effort does not have much political force now’. Mr. Geithner is right when he notes that the 2008 crisis rescue presented an ‘extreme real-time challenge’. But it would be wrong to assume that means the government had no models…. Franklin D. Roosevelt‘s administration managed a rescue and reform that was (in comparison with the Bush administration and later, the Obama Administration) far tougher on failing banks and easier on struggling homeowners. The Home Owners Loan Corporation that was established in 1933, for example, refinanced more than a million (or 20 percent of all) home mortgages in the country…. I do concur that the country is indebted — not to Mr. Geithner, but perhaps because of him. Consider the more than nine million homeowners who still owe more on their mortgages than their property is worth. This collective negative equity still holds back the economy and housing market…