The Boardcast

Who Is Timothy Geithner?

Yesterday a source inside President-elect Obama's transition team reported to news agencies that Timohty Geithner was Mr. Obama's number one pick for Treasury Secretary. They indicated that this appointment could take place as early as Monday. Although Mr. Geithner, who is the president and chief executive of the Federal Reserve Bank of NY, has been mentioned as a candidate for Treasury Secretary, he is not as well known as some of the other names mentioned in connection with this position, like Larry Summers and Paul Volcker. I was curious about this 47 year old native of New York and decided to do my own research on him. 

Unlike Henry Paulson who is considered a Wall Street expert and Ben Bernanke who is professorial and is an economist, Mr. Geithner according to The American Prospect is... 

"...not a high roller from a big bank or investment house but a public-minded civil servant. He has neither a doctorate in economics nor an M.B.A. After receiving a master's degree in international economics from Johns Hopkins University, he worked as a research assistant to Henry Kissinger and then joined the Treasury, where he was posted as an assistant attaché in Japan. He came to the attention of both Larry Summers and Robert Rubin and quickly moved up the ladder. He was a key player in the containment of the Asian financial crisis of 1997-1998 and later went to the International Monetary Fund as a top official. Despite being a Democrat, he was named president of the New York Fed after two stronger and more conservative candidates withdrew."

Mr. Geithner is not an investment bank insider nor an economist but his position in the Federal Reserve Bank of NY has put him at the center, with Paulson and Bernanke, in reacting and making decisions in the face of the economic crisis. According to an article written in the NY Times recently, he was the person who "brokered the deal enabling JPMorgan Chase to acquire Bear Stearns, with the crucial help of a $29 billion loan from the Fed." He also called together the heads of the major financial institutions for emergency meetings in September when it was clear that Lehman Brothers was facing bankruptcy. Controversially, he joined other regulators in reversing the decision to allow American International Group (AIG) to follow Lehman's path by extending an $85 billion bailout so they would not fold. According to news reports Mr. Geithner was also a primary player in "...refereeing the dispute between Citigroup and Wells Fargo over the teetering bank Wachovia, a contest in which Wells prevailed."

Mr. Geithner came to the attention of Larry Summers, Treasury Secretary during President Clinton's administration, when he, "...played a crucial role in calming several global financial crises..., including the turmoil in emerging markets in the 1990s that led to the meltdown of Long-Term Capital Management." 

An unknown aspect for credit unions is what effect his appointment will have on the development of new regulations and a change, if any, in regulatory framework. Last June Geithner wrote an article for the Financial Times entitled, "Reducing Risk in Financial Institutions". This article outlined steps that Geithner thinks should be taken to strengthen the financial system in the future. Much of what he proposes involves mitigating risk and requiring financial institutions to have appropriate liquidity to withstand major defaults. In addition he says that, 

"...we need to streamline and simplify the US regulatory framework. Our system has evolved into a confusing mix of diffused accountability, regulatory competition and a complex web of rules that create perverse incentives and leave huge opportunities for arbitrage and evasion."

Is he proposing a change in the regulatory system that oversees credit unions? This remains to be seen.
 

Understanding Economic Complexities - Blogs That Can Help

Blogs can be a source of information and education on many topics of current interest. It is amazing the number of experts who are willing to dispense their knowledge online by blogging on a regular basis. I have found two blogs to be particularly helpful in navigating the complexities of the twists & turns as well as the ups & downs our economy has been taking daily since September. These blogs are designed to provide the most current information on a crisis which is being compared to the Depression.

I am a big fan of podcasts on iTunes. Much of the programing on National Public Radio can be downloaded through iTunes and listened to at a convenient time. Recently, NPR began a program called Planet Money which is both a blog and a podcast and is designed to unravel the mystery of the global economy. Contributors include Adam Davidson, David Kestenbaum, Alex Blumberg and Laura Conaway who travel all over the world to report on stories which highlight and explain the intricacies of the economic news affecting our lives each day. Planet Money bloggers post mulitple times each day. Posts include multi-media resources which provide information from a variety of expert resources. Comments are encouraged and give wide and eclectic views of readers throughout the world. 

Planet Money includes numerous links to additional resources drawing from the best of the web. The Baseline Scenario is a blog which is cited often on NPR reports. This blog was cofounded in September, 2008 by Simon Johnson, former chief economist for the International Monetary Fund and professor at MIT, and by James Kwak who is a student at Yale Law School. They are joined by Peter Boone, Associate at the Centre for Economic Performance, London School of Economics. According to the authors the blog is designed,

"...to present a considered view of the key issues facing the global economy that is rapidly updated as new information and events arise. To that end, we publish an extended Baseline Scenario position on a weekly basis. During the week, we use the blog to develop positions, comment on events, and highlight other perspectives that we find worthwhile."

One of the most helpful sections on The Baseline Scenario is the Financial Crisis for Beginners, a primer for people who want to understand the concepts and terms related to the stresses on our economy.  The authors of this blog cover all aspects of this crisis in a thorough, thoughtful manner.

The Internet Wins This Election

Here is some Election 2008 trivia: Which news source did people use more during Campaign 2008, newspapers or the internet? According to research published by the Pew Research Center for the People and the Press 33% of the public used the internet as their primary source of information for election coverage and 29% used newspapers. Television is still the number one source but internet use for election news has increased by 23% since 2004 while TV use has decreased by 4%. Furthermore, 49% of those under 30 used the internet for their primary election coverage. I used the Internet and social networking sites for campaign news almost exclusively during the past year. Setting up RSS feeds on Google Reader gave me almost instantaneous updates from the candidates' sites as well as my favorite news blogs. Twitter provided immediate access to online conversations. I was able to follow each of the campaigns as well as news organizations like National Public Radio. Twitter feeds were updated many times each day. On election day a variety of "Tweeters" had feeds allowing voters to report voting issues and problems. NPR and You Tube collaborated on a special project called Video Your Vote. This site encouraged voters throughout the nation to submit short videos documenting their voting experiences in the 2008 elections. As of 7pm today, 1372 videos had been uploaded to the map. I believe that this project provides an unprecedented snap shot of our democratic system. There has been no other election in history which has been documented in this way. Of course I couldn't pass up this opportunity and so I submitted a video of the polls opening in Ward Six, Plattsburgh, NY.

I believe that the social impact of the internet has influenced citizen participation in this election. Interaction among the electorate has caused this election to truly be a common experience in spite of our political differences.