YouSaid · the spoken record

Tim Geithner

lines on the record: 30
first: 2025-04-03
most recent: 2025-04-03
sittings or episodes: 1
sources: podcast

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“I think that the most valuable, in some ways the most innovative thing we did. How we decided to recapitalize the banking system. And what became known as the stress test is a way to what we basically said is we want to make sure the banking system has enough capital to survive a great depression like outcome and we're going to give people a chance to go raise that capital if they can't raise it. We're going to give them the capital. And that, alongside all the things that have been done in the fall of 08, alongside the Keynesian stimulus, the first initial stimulus and what the Fed was doing, that was very, very, very helpful in trying to take out the remaining risk that we'd fall off the abyss. And that was something that countries hadn't done quite that way before.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“This is not going to be as interesting to you as your question. When I left my old job and I was writing about the financial crisis and I started to teach with Andre Metric at Yale, the financial crisis, I spent a lot of time looking back over a bunch of those choices we made or went into them. And I remember having the experience over and over again, which I love, which is I'd convene this team of people that are working on some aspect of the crisis. And I'd ask them, and where did that idea come from? Whose idea was that? And I love the fact that people would say over and over again, you know, I can't really remember. I remember sort of the meeting, not sure ideas it was. Anyways, it was a great group of people.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Any type of policy, any type of practice was short of the frontier of knowledge and that our basic idea job was to get it closer to the frontier. And I think it's very important for people who come into these jobs, whether you're a civil servant, whether you're coming in fresh political thinking, to bring that basic, have that sense of obligation and a possibility. So of course there's huge frontiers where you can if you bring an effort to improve and reform and it's not just the not just the tech stack of the IRS or the Treasury or the Fed vast opportunities there.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Objective reform and improvement acknowledge, I mean, one of the things that I first met Larry Summers when he first came to run the International Part of the Treasury when I was a civil servant. And one of the things that I admired about him most, I still admire him the most, is that he came in and he had this deep conviction that anything we were doing.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“As you said, I grew up in the treasury in some sense. I got to work with a hugely talented group of people, ethical people, very smart people, wonderful, amazing experience for me. And of course, anybody who's been in government has lived with a whole bunch of things. Obviously, technology, but not just technology, a bunch of things where, of course, if you took a fresh look at it, you'd say, gee, we could make that better. And I think a huge amount of credibility and trust in government requires people in those roles. Trying to continually bring”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a hard thing to explain and defend. It's one of those things that until you lose it, it's hard for people to appreciate it. One way of thinking about it is, you know, we're, I don't know, we're single digit percent of the world's population, we're 25% of the world's GDP, that would make you think that we have a big stake The basic quality of economic outcomes outside the United States just by that basic ratio. But we're 75% of the market cap of equity markets globally. So we have a huge fundamental economic interest that comes from what happens outside the frontiers of our borders. Of benefits to us in trying to make sure we protect and sustain that can't be indifferent to the fates of other nations.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“I think Americans and the world understand that the role we have and it's built up over time, it existed before. World War II, but its foundations were laid in the wake of the Second World War. That system where the US was central and dominant and still is dominant today is a system that's hugely beneficial to the United States. It's not designed as an act of charity to the world. It's something that our predecessors believe was deeply fundamental in the U.S. interests. These things you talked about, like the swap lines or the willingness to give access to dollar liquidity to foreign central banks in a crisis. These things are foundational to the system and we've made them at foundations because we thought they were fundamental to U.S. interests.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“And there's the kind of things that you don't know you have them until you risk losing them. It's important to recognize that it goes to what you've all been talking about. These are things that are about trust and credibility Whether the world believes that the US cangether and defend them and protect them. Is again, it's partly a measure of how fiscally responsible we are. Partly a measure of do people trust the Fed can operate independent of politics, but it's also a function of whether people believe that those foundations of relative stability and expectations, in rule of law, in property rights and things like that are still durable, protected assets of the country.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“That people feel comfortable, they can come take exposure to treasuries and to the dollar when they're worried about the world. Those things are hugely valuable. People tend to think of these things as partly around what's the dollar's roles reserve currency, but there's some foundational benefits, and they're about a type of trust, you could say, about a confidence and stability in rule of law, in property rights, in predictability, independence of the Fed is one piece of that. And I think it's important for people to not take for granted the durability of those things, because many of them are not fully anchored at law. Part of them are a set of norms and customs.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think it's good for people to understand that these things that are foundational to how well economies do cross time and how fair outcomes are and the incentives for innovation and investment, a lot of these things rest on what are intangible. Some people say sort of magical things like the treasury is the risk-free asset.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“The level of the central bank and the treasury with some constraints on discretion and good framework for disclosure and protections so that you are not putting the country in the position or the global financial system in the position where we are too late.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, exactly. I mean, we have a system where the anchor of the global financial system. As a central bank with much less authority than most major central banks, which is what they can do, what assets they can buy in a crisis, and has a political system, as you said, unlike a dominant parliamentary model where there's a set of checks and balances with a lot of rationale, foundational justice to them that is designed to make it hard. For the executive branch to do a bunch of things that you have to do quickly in a crisis. And that creates a huge vulnerability to the US, but also to the world. And I think it is something where there is a very good case to trying to make sure you have some delegated emergency authority.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“You're going to make it more economic for a whole bunch of risk to move outside the banking system, and you might leave yourself with a system where banks look less likely to fail, but the system is more unstable. And that's the thing you want to avoid. So you want to constantly be looking at that balance between how to make sure that the core of the system is the oxygen lifeblood of any economy is stable. That's a necessary but not sufficient test. You want to make sure that the rest of the system because of the incentive you creating for arbitrage and migration did not leave you with an overall less stable system. And you should look at the fresh at that challenge all the time.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“And you don't need to let the requirements of consensus or the long R global negotiations get in the way of countries deciding they want to be more conservative. And we were more conservative in some ways. But anyway, I think it's a valuable framework and we should want to protect and preserve it, but always look at it fresh and careful and understand that the fundamental challenge and design of these safeguards is that you're going to create incentives for arbitrage and you're going to create if you make the banking system safe.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a relatively integrated global financial system. So it is very important there to be a sort of common floor To govern and regulate, at least what the major banks do that operate across the system. That's a hugely valuable thing. And one of the great things that was done in the early 90s was that initial wave of setting of norms and standards, very valuable. Of course, you want that floor to be set at a reasonably conservative level, not easily eroded over time. But countries should be free to go beyond that. And you might look at that as we all did in the mid-2000s.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Relatively stronger hands, less leverage, less run risk. Now, of course, there will be some sadness and there will be some pain and people will lose some money and there will be some failure in even modest shocks in the system. But that's the way the system should work. The test of a system is, I think Larry Summers said it should be safe for failure. And you want to build a system that prevents failure where failure is inconceivable, but where it's safe for failure and that mean you can allow a fair amount of failure to happen without needing to do the massive escalation that we had to do in that crisis.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, of course, as you said, you want to always be careful. And because you won't know until you have the more exacting test of resilience and the more exacting test of resilience Is a severe recession that starts outside the system, not within the financial system. And we haven't really had that test yet. And the pandemic was not a perfect test of that system. So we won't really know. But I think you're right to say that The system as it looks today has a banking system which has more capital, better set of protections around it. And the non bank system has more stable foundations. You know, it's a system where the credit that comes outside the banking system is in”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think a system able to help finance a more rapid recovery that was from many other countries. And I think we were able to still preserve a system which is still, I think, best in the world at channeling capital if people have a good idea. And the wave of innovation, massive innovation we've seen in the US economy in a decade since, and its relative concentration in the United States is partly a function of the fact that we were able to repair the damage onto this system relatively quickly and put in place a set of institutions and ways to fund good ideas that still remains the envy of the world.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“And I said, you know, we made a bunch of mistakes. We were short of the frontier of what was possible. We were late to escalate. Didn't do enough fiscal. So I think we should look at those things with open eyes. But on those two measures, I think that the quality of the choices we ultimately made were quite good. There's one other thing you can look at, which is... What Health of the system that emerges from the ashes of the crisis? What's the quality of the reforms that are put in place? And I think if you look at, again, these are imperfect things. You know perfect comparisons. But our system emerged with much more capital than the peers of the major U.S. institutions. Therefore, we had a much more resilient system.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Rise in employment, loss of income, loss of wealth. And those are not perfect comparisons because everything is different. But I think they're pretty good comparisons. And I think that there's a bunch of arguments that, and Ben Bernanke knows what written about this, that the size of the shock that precipitated the crisis of 07-08 was larger than... Beginnings of the Great Depression. And I think by that measure, U.S. outcomes were dramatically better. Our outcomes were also significantly better than those of any other major economy went through the crisis.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, there's a bunch of different measures you can use. And of course, none of them are perfect. One is you could look at the quality of the macroeconomic outcomes relative to past crises. And it's not a great comparison. It seems like a low bar, but the classic comparison is to say, what was the depth of the recession, its duration, and what was the path of growth in the US in this experience? Relative to two things, two comparators. One is the Great Depression, where unemployment peaked to 25%, and you had like a decade of negative, if not, you know, terrible growth outcomes. And the other comparison is to look at the other major economies that went through this crisis and what were those outcomes in terms of basic thing. Depth of recession, speed of recovery.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a good set of arguments that we overdid it in the pandemic, but the speed and the mix and the overall force and the composition of the fiscal policy measures put in place there are good counterexample. And I think that is a very good lesson. Of course, you don't want to be like, you know, you don't want to overlearn your lessons of these things. I think the other big lesson, of course, is, and we've talked about this, is just again, that we were as a country, we were late to escalate on the purely financial dimensions of the crisis. And part of that was because, as we talked before, people had no memory of what it takes, and people could debate whether we were going to have a crisis for a long period of time. And that got the way of speed. But partly because in our system, a lot of the very powerful thing that runs for the Congress, and that it takes some time. And normally in our system, and uniquely our system in some ways because of the checks and balances, things have to feel terrible.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Think the enduring, the enduring debate everyone still has is a good debate to have, which is a version of your question, Tracy, which is that, but couldn't we have done more? For the individual, and shouldn't we have done more for the individual and wouldn't it have been more effective and less damaging? And absolutely, that's the right question. And the fiscal response of the U.S. in the pandemic is just a good counter example.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“It would be a mistake to try one without the other. And if you look back, and this is the right way to look back, and part of what Andrew Metro and his team have built at Yale is just to try to do a careful analytical, dispassionate look back at mistakes and lessons and choices. And it is absolutely fair to say that the US as a political system, as a country, did not do enough of the classic Keynesian fiscal response early enough and sustained enough to complement the things we did to prevent the collapse of the financial system.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, excellent question. And they really are not, you can't think of them as choices because there is no credible response to a financial crisis that does not come with a huge amount, what we might call classic Keynesian direct support to households, state and local governments, and to business in some way. And you can figure out your financial system stuff and do that well. It will not be sufficient because you need to use that massive Keynesian arsenal of force to help take out some of the risk of the acute recession. But it's also true that doing the Keynesian stuff is not sufficient. No economy can survive the collapse of the banking system. And the only way to prevent the collapse of a banking system or a financial system is to guarantee deposits, lend freely against collateral to solvent institutions, and sometimes to recapitalize the banking system. So they are necessary things that go together.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“More unbalanced economy with a financial system very vulnerable to runs took a long time to build up. And I don't think we had that mix of factors until 0.07.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“It was also true that in the decades after the Great Depression, the financial system outgrew the banking system and outgrew the protections in place around the banking system to prevent excess leverage and runs. And our system in 07, this is a very important thing to remember, is that in our system in 07, you had a banking system, which obviously did not have enough capital to withstand a terrible recession. But the more consequential risk for the system was you had a nonbank financial system with a set of investment banks and non-bank financial institutions like GE Capital and others and a whole bunch of funding vehicles that had classic bank type run risk that were able to run with a huge amount of leverage because people who had thought the last decades suggest the future would be benign. And so that mix of factors”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think that you had that mix of factors then, the type of dry tinder. The left you vulnerable to that. Why was that part of what makes you vulnerable to a classic panic is when the economy as a whole is so imbalanced? People have borrowed too much relative to income. There's a whole set of expectations that go into leverage and behavior based on a long period of rising house prices or asset prices. And you didn't have this period we called the great moderation where people got used to the expectation that recessioners would be short and shallow and that equity price readjustments you could call them wouldn't cascade into something dangerous. So you need a long period for the economy to get way out of balance, which was true in 07.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“And I was quite eager to see this book. And it was a quite fat book, but what was remarkable about the book was in those decades between the Great Depression and 2007, the things the U.S. had to deal with were relatively modest. Nothing like the classic systemic financial crisis. And so that body of precedent was of limited value. And you could have people sitting around the table saying, but what we should do what Sweden did or not do what Japan did, or people got all these debates, but if you ask them, what did Sweden actually do, there was no knowledge of that? And, you know, you could spend your time calling the person in Sweden who had done that, but that takes some time. It's so funny”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source
“Know it's like the classic thing these happen very slowly and then Way quickly. And you don't know what the margin is for something that is like burning slowly, turning to something that's catastrophic. And so you need to be able to move very, very quickly. And again, one of the barriers to moving quickly. There's lots of barriers. One of the barriers moving quickly is when people are not really sure because they hadn't lived it. There's not no people around them in the institution that are coming into who have any knowledge of it. When I went to the New York Fed, I remember initially they had something they called the doomsday book. The doomsday book was the comprehensive set of precedent of what the New York Fed had done in the decades since the Great Depression.”
2025-04-03 · Odd Lots · Tim Geithner on How to Fight the Next Financial Crisis · IDENTIFIED FROM THE TRANSCRIPT · source