When Secretary of the Treasury Timothy Geithner was head of the Federal Reserve Bank of New York in 2005, he led an initiative to modernize credit derivative trading.
Score one for Geithner.
Simultaneously, however, the economy was on the edge of its historic meltdown, sparked by the housing market collapse, and Geithner failed to act, according to The Washington Post.
Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, but he and the Federal Reserve did not act with enough force to blunt the troubles that ensued, the newspaper reported.
That was largely because he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound, the paper said.
Consequently, although Geithner might've helped douse the fire, he did nothing.
Yet, the Secretary was recently quoted as saying, "We're having a major financial crisis in part because of failures of supervision."
He might've been talking about himself at the New York Fed.
As if to make up for the lost chance, and partly because he has become the poster child for regulation, Geithner is now urging even more government oversight of the financial system, on a scale not seen since the Great Depression.
Ideology aside, regulation is not a panacea for economic woes, warn some.
The precise regulation formula, according to David Moss, professor of economic history at Harvard Business School: "Not too much, and not too little."
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