THE STASH AUGUST 4, 2009
The Wall Street Journal has a nice scoop today about a meeting Geithner convened Friday to dress down the various regulators bickering over the administration's regulatory reform proposal. According to the Journal:
Mr. Geithner told the regulators Friday that "enough is enough," said one person familiar with the meeting. Mr. Geithner said regulators had been given a chance to air their concerns, but that it was time to stop, this person said.
Among those gathered in the Treasury conference room were Federal Reserve Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro and Federal Deposit Insurance Corp. Chairman Sheila Bair.
Friday's roughly hourlong meeting was described as unusual, not only because of Mr. Geithner's repeated use of obscenities, but because of the aggressive posture he took with officials from federal agencies generally considered independent of the White House. Mr. Geithner reminded attendees that the administration and Congress set policy, not the regulatory agencies.
Mr. Geithner, without singling out officials, raised concerns about regulators who questioned the wisdom of giving the Federal Reserve more power to oversee the financial system. Ms. Schapiro and Ms. Bair, among others, have argued that more authority should be shared among a council of regulators.
Interestingly, if not surprisingly, these internecine battles have been a recurring headache for Geithner at least since he took over as Treasury secretary (and actually even before). As I report in my latest print piece, Geithner was very concerned that this same kind of squabbling would sink the financial rescue plan he was set to announce on February 10 (among other things, Treasury was alarmed by the number of leaks coming from various regulatory agencies):
Going into the rollout, says one colleague, Geithner told his staff that, in a crisis, "we had to be one government" and that different agencies "had to sign in blood, with no tribal conflict."
Somehow I don't think these tribal conflicts are going away any time soon.
P.S. For what it's worth, it's hard to believe this story didn't come from the FDIC. There are some natural frictions between Treasury and various other agencies owing to their different views on regulation. But the rift between Geithner and Bair is deep-seated and longstanding. The only question is whether Geithner and Treasury expected the details of the meeting to trickle into the press. I'm assuming they did, since there would be nothing to stop Bair from passing them along, and since she was one of the obvious (if unspoken) objects of Geithner's frustration.
Update: Felix Salmon speculates that Treasury not only expected to see details of the meeting in the press, it probably staged the meeting for that purpose (and should be considered the leading leak suspect):
I can imagine the assembled regulators sitting at Treasury, sharing puzzled glances as Geithner went on his tirade, and then thinking “oh, now I get it” when they saw this morning’s WSJ. Geithner has been losing control of the regulatory-reform news agenda of late, and now he’s sent a clear and public message that any regulator standing in public opposition to his plan will be viewed as being in opposition to regulatory reform more generally. It’s a pretty effective way of quashing public debate, during a time when public debate is, at the margin, only going to delay or weaken any eventual reform.
I will say this: In the course of profiling Geithner and writing about Treasury these last nine or ten months, at least a dozen people who've worked closely with Geithner at some point have told me they've never, ever seen him lose it. So if Geithner was as worked up as the Journal story says, then he was either more frustrated than he's been in years, or he was trying to send a message.