Timothy Geithner Pt. 2

  • Aired:  05/21/14
  •  | Views: 31,436

While acknowledging that the bailout was unfair, Timothy Geithner argues that it was the only available solution. (3:55)

>> Jon: OKAY.WELCOME BACK

SO WE'RE HERE, WE'RE TALKINGWITH FORMER SECRETARY OF

TREASURY TIMOTHY GEITHNER.

SO THIS GETS INTO OUR NEXTELEMENT WHICH IS THE PERCEPTION

AMONGST THE ENGINEERS OF THEBAILOUT THAT THEY ARE BEING

UNREASONABLY CASTIGATED.

>> NO, I DON'T THINK IT'SUNREASONABLE.

IT WAS DEEPLY UNFAIR.

THE RESCUE ITSELF AT ITS CORE ISA FUNDAMENTALLY UNFAIR THING,

EXCEPT -->> Jon: CORRECT.

-- EXCEPT RELATIVE TO THEALTERNATIVE OF LETTING THE

SYSTEM BURN DOWN.

>> Jon: THAT SEEMS LIKE AFALSE CHOICE.

>> IT'S NOT A FALSE CHOICE.

>> Jon: YOU DON'T BELIEVE THEBAILOUT COULD HAVE BEEN

ENGINEERED IN ANY OTHER WAY THANTHE ONE WE DID IT, OTHERWISE WE

HAVE A DEPRESSION.

>> I KNOW IT'S HARD.

IT'S HARD TO ACCEPT, EXCEPTTHERE'S BEEN A GREAT HISTORY OF

MISTAKES AND ERRORS OF COUNTRIESTRYING TO HAVE IT ALWAYS DO IT

DIFFERENTLY WHICH WOULD HAVEBEEN DRAMATICALLY MORE DAMAGING

FOR THEIR COUNTRIES.

THE IDEA THAT THIS COULD HAVEBEEN A MUCH STRONGER RECOVERY

AND LESS DAMAGING IS MOSTLY NOTABOUT THE DESIGN OF THE RESCUE.

BECAUSE THE RESCUE WAS VERYEFFECTIVE, IT DID THE ESSENTIAL

THING, MUCH MORE EFFECTIVE --

>> Jon: DIDN'T IT JUSTREINFLATE A TOXIC SYSTEM?

>> NO.

>> Jon: THE BANKING SYSTEM WASTOXIC, YES?

>> ABSOLUTELY.

>> Jon: WE PUT A TREMENDOUSAMOUNT OF MONEY BACK INTO IT TO

MAKE THEM WHOLE WHILE KIND OFIGNORING THE HOME OWNER SECTION.

>> WELL, THERE'S SOMETHING TOTHAT BUT LET ME GIVE YOU A

SLIGHTLY DIFFERENT PERSPECTIVEON THAT

(LAUGHTER)IN EFFECT, WHAT HAPPENED --

>> Jon: ALL RIGHT.

>> WE LET THIS CRISIS, INSOME WAYS, BURN TOO HOT.

AND I KNOW PEOPLE DON'T FEELTHIS, DON'T SEE IT, BUT, IN

EFFECT, THE REASON WHY THIS WASSO SEVERE IS BECAUSE WE LET THAT

PANIC GET TO MOMEMTUM AND, INSOME WAYS, WE ALLOWED TOO MUCH

FAILURE AND CRUSHING FAILUREACROSS THE SYSTEM.

NOW, AFTER THE WE BROKE THEPANIC, WE DID FORCE THEM TO

RAISE A BUNCH OF CAPITAL, PAYBACK THE TAXPAYER, UNWIND ALL

THOSE PROGRAMS.

>> Jon: LET'S TALK ABOUTFORCING THEM, BECAUSE I THINK

THAT'S AN INTERESTING WAY OFPHRASING IT BECAUSE WHAT WE DID

IS WE GAVE THEM THAT MONEY ANDTHEN WE OPENED UP A DISCOUNT

WINDOW GO TO AND BORROW AT0%, TURN AROUND AND BUY

TREASURIES AT 3% AND BASICALLYCREATE --

>> NOT QUITE.

LET ME SAY IT SLIGHTLYDIFFERENTLY.

>> Jon: OKAY(LAUGHTER)

>> WHAT WE DID -->> Jon: THEY GAVE US $100, AND

WE GAVE THEM $103.

>> LET ME SAY IT DIFFERENTLY.

>> Jon: ALL RIGHT.

>> WE DID WHAT YOU HAVE TO DO INA PANIC, OKAY, WHICH IS WE, FOR

A PRICE, FOR A FEE -->> Jon: 5%.

>> WELL, SOMETIMES IT WASCHEAPER THAN THAT, SOMETIMES IT

WAS MORE EXPENSIVE THAN THAT. WEGAVE THEM A SET OF PROTECTIONS

WHICH WE MADE THEM PAY FOR ANDWE MADE THEM PAY THE TAXPAYER

BACK. AND THE TAXPAYER EARNED APROFIT ON THOSE PROGRAMS

WHICH ARE GOING TO BE WORTH WELLTO $100 BILLION.

>> Jon: THAT SUGGESTS THEDAMAGE TO OUR ECONOMY WAS MERELY

THE TAXPAYER IS ON THE HOOK -->> NO, IT'S TO SUGGEST THAT IF

PEOPLE PERCEIVE THIS TODAY STILLAS IF WE WENT AND GAVE THEM

MONEY THAT THEY WERE NEVER GOINGTO SEE AGAIN THAT WE DIDN'T NEED

TO DO.

>> Jon: I HONESTLY HAVE NOIDEA HOW WE EDIT THIS.

SO I AM GOING TO SAY, LIKE, TIMGEITHNER, THANK YOU SO MUCH!

(APPLAUSE)THERE IS SO MUCH ON THE WEB

RIGHT NOW ON THIS, I DON'T KNOWIF WE BROKE THE WEB OR NOT, BUT

THE THE BOOK IS CALLED "STRESSTEST."

TIMOTNY GEITHNER WROTE IT, WASTHE SECRETARY OF TREASURY.

IT'S A VERY INTERESTING READ.

I ACTUALLY SAY THIS, IT'S AREALLY WELL-WRITTEN BOOK AND

EASY TO UNDERSTAND AND YOU CANYELL AT CERTAIN PAGES, IF YOU

WANT.

(LAUGHTER)BUT THANK YOU SO MUCH FOR

STOPPING BY AND SPENDING ANINORDINATE AMOUNT OF TIME WITH

US.

TIMOTNY GEITHNER, THANK YOU FORBEING HERE.

(APPLAUSE)♪♪

Loading...