One of the largest criticisms facing Tim Geithner is that his recommendations further consolidated and grew banks that were already “too big to fail”. Dead Baker, of the Center for Economic and Policy Research, said that he made it the, “center of his agenda to restore the banks to the pre-crisis status quo, rather than make way for a smaller and less consolidated financial sector.” There’s no question that the financial sector has not been made more accountable or less volatile by the federal controls that have been placed on it, nor by government stimulus. Although this may be partly due to congressional obstruction of some of the new financial regulatory agencies, and partly due to the inefficacy of agencies like the SEC to truly bring those banks to bear for their malfeasance.
Timothy Geithner is one of the last vestiges of the old Obama administration, the one that largely followed establishment thinking and failed to push back against an aggressively obstructionist Republican congress. Since Obama’s September jobs speech, there has been a sea-change in his strategy; a more aggressive, active, and vocal administration that is willing to breech status quo. Possibly galvanized by the Occupy Wall Street movement and the anti-Wall Street popular sentiment, he has sought to place stricter controls and more accountability on the financial sector.
During the last recess Obama finally appointed Richard Cardray to head up the new Consumer Financial Protection Bureau, an agency that had been languishing in its infancy since last summer without a director. It was an end-around nomination, circumventing Republican opposition. It’s also the kind of move, and the kind of emphasis, that just isn’t in the Geithner economic game plan. As a result, the Treasury Secretary and his conservation of the financial status quo is on their way out.