Yesterday, NBC's Brian Williams had an interview with Treasury Secretary Tim Geithner and at one point asked him about popular concerns that the financial industry was being treated differently from the auto industry:
WILLIAMS: People think the car business has been treated differently by the administration from the finance business. You bounced the CEO of GM, and yet there are CEOs of finance companies still in office. Fair argument?
Sec. GEITHNER: I don't think so. If you, again, look at -- look at what's happened across the US financial system over the last 18 months. There has been dramatic restructuring. The entire landscape of our financial system has changed dramatically. The places where there is the most risk have changed and shrunk and --dramatically. Where the government has acted, has had to take exceptional action, the government has come in and changed management and boards so that these firms can emerge stronger.
And you know, he does have a good point. Banks like Indymac and Washington Mutual were seized by the government, and others, like Merrill Lynch or Bear Sterns, underwent forced mergers, just as the government is urging Chrylser to do with Fiat. In taking an industry-wide view, you see a lot of change in the financial sector due to government demands. The question really is, how viable are the remaining banks -- the now long-running solvency debate over giants like Citi, Bank of America and others. The Treasury Department hopes that the Public-Private Investment Program will help provide that answer, along with the stress tests, so that any further action can be as limited as possible. The administration's critics are confident that these banks are insolvent and want them restructured as quickly as possible to limit the damage. Given the difficulty and political constraints of any kind of widespread restructuring, the administration is taking a slower and more deliberate approach.
If you're as obsessed with Geithner as I am, or just interested in the latest on our financial crisis, watch the whole interview.
-- Tim Fernholz
