NYMag: “If we’d have been for it, it probably would have happened.”
In fact, Geithner had, by then, made his peace with the Volcker Rule. After being overruled by his boss, he had been tasked with designing the proposal so it would be sound policy—and though Geithner still doubted it would do much good, he was now convinced it wouldn’t do much damage, either.
.. I’d been told that one of the most prominent megabank chiefs, who once boasted to friends of voting for Obama, now refers to him privately as a “Chicago mob guy.” Do all your brethren feel this way? I asked. “Oh, not everybody—just most of them,” he replied. “Jamie [Dimon]? Lloyd [Blankfein]? They might not say Obama’s a socialist, but they come pretty close.”
.. By Election Day, according to the Center for Responsive Politics, three of the top seven institutions in terms of bundled donations to Obama were New York megabanks: Goldman Sachs, Citigroup, and JPMorgan Chase, with UBS AG and Morgan Stanley a little further down in the top twenty.
.. the cost of the bailout to taxpayers was smaller than that of the S&L crisis of the early nineties.
.. Geithner considers such thinking illogical. His objective was to rescue the economy from ruin, and if the “price” was that a bunch of bankers benefited, he was happy to pay it.
.. Dimon, despite his frequent invitations to the White House, began complaining about a lack of access. “If you don’t want us to lobby, give us a seat at the table” became his mantra, punctuated with complaints about the paucity of people inside the administration with a Wall Street background.
.. im Geithner, too, finds himself in the odd position of battling with an industry toward which he’s never felt an ounce of antipathy; in private, he now half-mockingly refers to the megabank CEOs as “the warlords.”
.. Geithner makes no secret of his ideological disposition when it comes to reform. “I care about us passing something good and strong,” he tells me. “And my feeling is that you have to do this from the center.”
What that’s meant in practice is that Geithner’s team spent much of its time during the debate over the Senate bill helping Senate Banking Committee chair Chris Dodd kill off or modify amendments being offered by more-progressive Democrats. A good example was Bernie Sanders’s measure to audit the Fed, which the administration played a key role in getting the senator from Vermont to tone down. Another was the Brown-Kaufman Amendment, which became a cause célèbre among lefty reformer such as former IMF economist Simon Johnson. “If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” says the senior Treasury official. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”
.. Whatever the effects of the bill, among them will be neither an end to the too-big-too-fail doctrine nor any curb on what the sharpest Wall Streeters see as the central threat to the system’s stability: excessive financial leverage. Geithner, Summers, and Obama had little interest in tackling those matters, not because they are indentured servants to Wall Street but because at heart they are all technocrats who believe the system doesn’t need to be rebooted or downsized, merely better supervised.
.. Not long ago, a big-time Obama Wall Street fund-raiser asked his go-to guy at one of the megabanks that had lavishly supported the candidate in 2008 what level of donations the president might expect from the firm’s people in 2012. The answer was less than a tenth of the previous total.