Why Is Wall Street So Happy With Geithner?

Question

Why does it seem that Wall Street is so happy with Geithner? I was reading his bio and he has basically spent his entire career in Washington. Various treasury and fed posts - mostly focused on foreign affairs. He has a liberal arts education. He has no real business or Wall Street experience. No business or economic education. So why is everyone so happy with him? I know that he has generally gotten positive reviews for his job as the head of the New York Fed and that working there has obviously put him in the middle of the action over the last 12 months. But how much has he actually done versus just following the lead of Paulson and Bernake? And doesn't it seem like we need someone in there with a significant business backgound (i.e. a career of meaningful business experience, business education, etc) with a strong preference towards significant Wall Street experience? Someone like Rubin, Paulson, etc. What do you guys think?

P.S. This is not intended as a pro or anti Obama thread

P.S. This is not intended as a pro or anti Obama thread

Raabend · Answer

Change your name to IHateTHeOBama

IHateTheGMAT · Answer

Haha. Hey, I do not hate Obama. Didn't you read my P.S.!?

But I am confused about the positive response to Geithner.

Raabend · Answer

I was just messing with you. As for Geithner, I dont know enough about him to have a firm opinion on the choice. However, alot of the world's most successful businessmen and business leaders do not have strong educational backgrounds in business (if any at all). He does seem to have a very strong background since he worked for the Treasury already. But again, no real opinion from me. Wait and see, wait and see.

bostonsparky · Answer

My opinion of him will be based highly on his position is regarding the automakers. Telling them to go home and come back when they actually had a realistic plan is a start, but if people think the banks are bad when it comes to using government aid as a crutch, I feel US automakers are twice as worse. They are the ultimate solve-the-short-term-problem-instead-of-the-long-term-problem industry (as they have proven many times over) and will only use any financial infusion to keep trying to fend off efficiency regulations. I unfortunately truly think that one of the big 3(likely GM) going under will be the only way to truly induce reform.

The wisest rebuttal to this that Ive heard mentioned how this failure will in fact retard US growth in manufacturing greener cars, but I still forecast a lot of GMs business being picked up by Ford.

Couple other things off the top of my head:

1) He may not have extensive Wall Street experience, but does have quite a bit with the IMF, which I value a lot considering how globally linked stuff clearly is
2) Lawrence Summers (your classic good behind the scenes, terrible as your face man) also got tapped for a high position. This I like because he is definitely the type who will make the smart decision instead of the popular one.

As always just my $0.02.

FN · Answer

its a kabala of nyomphs that run wall street and DC .. so they are happy to see one of themselves to keep the boat afloat..

though its an indication..Obama's change rehtoric is just that a load of bull.. he is just going to be a figure-head president..

Raabend · Answer

Policy change is easier to implement with leaders surrounding you. Applying the change talk to every single thing is just dishonest. "The white house is still white!", "Why does my TV still not get channel 67?"! Come on! He sets the vision and appoints people who can help get him there. Unfortunately, beltway fixtures are what work for that. He never said his cabinet would be new faces hand picked from obscurity.

GoBruin · Answer

I don't think it's Geithner. You can put almost anyone in who is relatively unknown and they will get positive feedback (remember when palin was announced). I think the market generally doesn't like uncertainty, and having names Geithner and a economic team, at least stops all the guessing of these positions.

This is the initial market bounce, I think it takes a little bit of time for the true market to decide if he's the man.

This is the initial market bounce, I think it takes a little bit of time for the true market to decide if he's the man.

Sleepy · Answer

he was the head of the New York Fed....doesn't that involve dealing with Wall Street? I assumed he'd be some kind of point person between the Fed and the Street in that role.

IHateTheGMAT · Answer

Yeah it does involve dealing with Wall Street and I mentioned that in my opening post. But experience regulating Wall Street is completely different than being CEO of a major bank (Rubin, Paulson, etc).

On another note, Summers as head of his economic council seems like a solid choice. But I don't like the rumor that he would replace Bernake as fed chair in 2010. Who better to have as fed chair right now than the number 1 expert on the great depression? And I think Bernake has been doing a good job.

jb32 · Answer

The market likes it because of the continuity between him and Paulson. He's been in the middle of this thing since it began, which means no lag time to get caught up and no on-the-job training.

fall09 · Answer

I agree.The market is at oversold conditions and looking for any catalyst to rally.Also lot of short covering.

Market is expecting a meltdown in commercial mortgages and consumer loans.We will need to see how the next administration is going to deal with them.

89nk · Answer

I feel that I agree most with jb32 comment.

bostonsparky · Answer

Relevant article I just found on him and how relevant his experience is: https://www.economist.com/daily/columns/ ... 9&fsrc=nwl

antapple · Answer

I think he was part of a MExico baill out, lkong term capital management and this most recent one.
(or maybe he just attracts melting of economies...) kidding...

Why Is Wall Street So Happy With Geithner?

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