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Geithner's Other Problem

I think Noam's right not to get worked up about Tim Geithner's tax problem. The Geithner problem I'm more worried about has to do with his oversight of Citigroup while helming the New York Fed. ProPublica's Jeff Gerth, who investigated Geithner's oversight of Citigroup, pretty much concedes in his piece that he didn't come up with anything very damning about Geithner himself, but he builds a strong case that the New York Fed fell down on the job when it came to Citigroup:

[P]oor risk management and weak capital levels were central to Citigroup's undoing. One enforcement agreement in place before Geithner took office in 2003 – an order requiring quarterly risk reports – was lifted during his watch. A ban on major acquisitions also was eliminated a year after it had been imposed in 2005.

Afterward, in 2006 and 2007, Citigroup aggressively expanded into the subprime mortgage business and bought a hedge fund and Japanese brokerage, among other assets.

A year later, as the global financial crisis took hold, Citigroup took losses and writedowns of more than $50 billion. The New York Fed brought no public enforcement case, although examiners privately sent a critical letter to the company in the first half of 2008.

Again, it's hard to know if Geithner himself had much to do with this. (There's a reason William Greider called his book about the Fed Secrets of the Temple.) But if I was on the Senate Finance Committee, I'd spend more time asking Geithner about Citigroup than his tax filings.

--Jason Zengerle