Is Geithner Being Set Up

by Brien Jackson

It seems like more and more people are starting to notice that a lot of people in the administration are perferctly fine with letting Geithner own the administration’s plans in regards to the banks. Here’s Tim Fernholz:

But Heilemann’s sketches of the relevant personalities is certainly of interest, especially Paul Volcker’s desire to get in on the action. It also has some delightfully catty blind quotes, including this observation: ““All I can tell you is that Larry [Summers] seems quite happy with [the banking proposal] being known as the Geithner Plan.” No doubt, but from here on out I’ll try to avoid that term just to make sure credit goes where credit is due — this plan has the stamp of the whole administration, however politically convenient it may be to have the Treasury secretary own it.

That’s probably a pretty fair assessment on Tim’s part, but I think it should be clearly understood what is happening by tying everything to Geithner; the administration is hedging against a future backlash against any perceived incompetence on it’s part. And that’s probably a pretty smart thing to do. If the Geithner plan really is designed as a stepping stone to make nationalization more politically feasible, then the biggest risk is that, if the plan fails, there won’t be any confidence in the administration’s abilities, even if nationalizing is popular in its own right. If that happens, the easiest way to deal with it is to…fire somebody. Especially if that someebody is seen as particularly to blame. So it clearly seems that Geithtner is being put way out on a limb, and if someone’s head has to roll to inject some political capital down the road, he’s probably going to get the axe. It’s not necessarily fair, but that’s life.