Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

It was not Obama at his most articulate. But it was a clear statement of basic principles. The “core investment needs of the country” were a matter for “private capital.” Government stimulus spending, whether on infrastructure or on education, was incidental. What was crucial was getting the banks back on their feet. It was music to the ears of the man who would deliver the “tough love” that Obama promised—Tim Geithner, his Treasury secretary. For Geithner nationalization was never an option. In 2008 at the New York Fed he had seen the depth of the market panic. He had witnessed the ructions over Bear and Fannie Mae and Freddie Mac. He had been in the room on the afternoon of Monday, October 13, alongside Paulson, Bernanke and Bair when they forced the bankers to take TARP capital. That was enough. As far as Geithner was concerned, to have pushed for further nationalizations in 2009 would have been a “deeply transforming policy mistake.”