Former Treasury Secretary Tim Geithner has been out and about hawking his new book, Stress Test, about the financial crisis. Last week, for example, he drew a sizable crowd at a Barnes & Noble in New York. As New York Times business columnist Gretchen Morgenson described it, “Mr. Geithner left little to chance at the event: It consisted of a highly scripted chat with a friendly interviewer who screened audience questions. After an hour, Mr. Geithner was whisked from the building.”
Things could not have been more different when the former Treasury Secretary appeared on Comedy Central’s The Daily Show on Wednesday night. This was no cozy “chat with a friendly interviewer.” Host Jon Stewart spent more than 40 minutes grilling and arguing with Geithner about bank bailouts, the housing crisis, and whether the Washington establishment is too beholden to big banks.
Stewart started with an absurdist take on his guest’s favorite metaphor about the role of the federal government in the financial crisis. Geithner frequently compares the situation to flying a plane that has been set on fire, with the arsonists and innocent passengers still aboard. The first goal, he says, is to land the plane safely for the sake of the innocent passengers, not to punish the arsonists.
“You have to do the opposite of what seems intuitive and fair,” Geithner said.
However, Stewart complained, “It felt like you got the arsonists off the plane and got them a massage and a steak dinner.”
The conversation did not become any more collegial as it progressed. Stewart asked many probing questions but sadly, on multiple occasions when Geithner seemed ready to deliver a detailed answer, the host cut his guest off mid-sentence.
One of the most contentious exchanges occurred after Stewart challenged Geithner for giving huge amounts of money to the financial services industry, but not doing enough to help homeowners facing foreclosure.
“You’re assuming a unicorn,” Geithner said, meaning that Stewart was suggesting that there had been a better path for the government to have taken. He said that the White House was forced to operate within the constraints set by a Congress that was more interested in budget cutting than aid programs.
“You’re assuming we could have got Congress to go legislate hundreds of billions of dollars instead of doing all these other things, and give those directly to the homeowner and that would have been more effective,” Geithner said.
“The only reason why I say that is because somehow a unicorn did appear for the banks,” Stewart replied.
Geithner has been consistent in his public statements that the bailout was, as he sees it, a choice between greater and lesser evils, not between a good alternative and a bad one. He justifies the choices made in Washington by pointing out that the economy, while terrible for years, did not plunge into a second Great Depression.
“Because we did this set of, frankly pretty offensive, seemingly unfair things we have an economy that is…much, much better than it would have been.”
Stewart continued to assert, without evidence, that the administration could have provided more aid to homeowners, and less to the banks, which Geithner continually denied.
“I am completely confident that the alternative strategy that would have been more comfortable to you at the beginning, you would have cheered us for, you would have loved us for, would have been devastating to the people you’re most worried about,” Geithner said.
You can watch part of Geithner’s appearance above, or see the full 42-minute interview here.
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