Obama wanted to dissolve Citibank. Geithner ignored him.

[MadImmortalMan]

Link

Book: Treasury Secretary ignored Obama directive

By ANTHONY McCARTNEY, AP Entertainment Writer – 4 hours ago

NEW YORK (AP) — A new book offering an insider's account of the White House's response to the financial crisis says that U.S. Treasury Secretary Tim Geithner ignored an order from President Barack Obama calling for reconstruction of major banks.

According to Pulitzer Prize-winning author Ron Suskind, the incident is just one of several in which Obama struggled with a divided group of advisers, some of whom he didn't initially consider for their high-profile roles.

Suskind interviewed more than 200 people, including Obama, Geithner and other top officials for "Confidence Men: Wall Street, Washington, and The Education of A President," which will be released Sept. 20. The Associated Press purchased a copy on Thursday.

The book states Geithner and the Treasury Department ignored a March 2009 order to consider dissolving banking giant Citigroup while continuing stress tests on banks, which were burdened with toxic mortgage assets.

In the book, Obama does not deny Suskind's account, but does not reveal what he told Geithner when he found out. "Agitated may be too strong a word," Suskind quotes Obama as saying. Obama says later in the book that he was trying to be decisive but "the speed with which the bureaucracy could exercise my decision was slower than I wanted."

Geithner says in the book that he did not recall that Obama was mad at him about the Citigroup decision and rejected allegations contained in White House documents that his department had been slow to enact the president's plans.

"I don't slow walk the president on anything," Geithner told Suskind.

"The Citbank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president's authority was being systematically undermined or hedged by his seasoned advisers," Suskind writes.

Suskind states that Obama accepts the blame for mismanagement in his administration while noting that restructuring the financial system was complicated and could have resulted in deeper financial harm. One of the major complaints about Obama's administration is that it was too easy on major financial institutions, including Citi. The president had wanted Treasury officials to focus on a proposal to dissolve the bank, but no plan was ever created, the book states.

In a February 2011 interview with Suskind, Obama acknowledges another ongoing criticism — that he is too focused on policy and not on telling a larger story, one the public could relate to. Obama is quoted as saying he was elected in part because "he had connected our current predicaments with the broader arc of American history," but that such a "narrative thread" had been lost. Obama observes that he and fellow Democrats Bill Clinton and Jimmy Carter "all have sort of the disease of being policy wonks."

Suskind's book supports other accounts of disagreement among advisers over how large a stimulus was necessary to revive the economy and how aggressively to deal with financial institutions that had become "too big to fail."

Larry Summers, the former White House economic adviser, is quoted as lamenting that he and others felt "home alone" and that mistakes made under Obama would not have happened under President Clinton, for whom Summers also served. Interviewed by Suskind, Summers initially denied making such comments, then acknowledged them, saying he was frustrated at having "five issues" of major importance to deal with at once and not "five times as many" officials to handle them.

The book says one of Obama's top advisers, former chief of staff Rahm Emanuel, was not the president's first choice for the position. According to Suskind, Emanuel's name was not even on the initial short list, which included White House aide Pete Rouse.

An investigative reporter, Suskind won a Pulitzer Prize in 1995 while working for the Wall Street Journal.

Yeah, I'm not so sure Obama was wrong there. Might have been a good idea. Also, pretty much shows the guy has balls to be willing to smash up a campaign money ATM like that.

[DGuller]

I don't think having your order ignored is a good example of having balls.

[Habbaku]

Would've been excellent if he had actually followed up on it.  Letting your Treasury Secretary get away with ignoring you is...off.

[jimmy olsen]

Would've been excellent if he had actually followed up on it.  Letting your Treasury Secretary get away with ignoring you is...off.

I don't know if it would have been excellent, but he definitely should have fired him for not following orders.

[Neil]

It's not like Obama had perfect freedom of action in this situation.

[Razgovory]

Would've been excellent if he had actually followed up on it.  Letting your Treasury Secretary get away with ignoring you is...off.

I don't know if it would have been excellent, but he definitely should have fired him for not following orders.

Indeed.  He sacked that general last year for less then that.

[Sheilbh]

I don't know if it would have been excellent, but he definitely should have fired him for not following orders.

Geithner was coming in for a lot of criticism at that point (possibly some of it briefed from the White House) but the truth is that firing your credible Treasury Secretary two months after coming into office, during a huge recession could have had some bad consequences and would certainly have smacked of weakness.

Despite the criticism Geithner and his stress tests were receiving at that time I think they worked.

I'd wait for the book because I'm not sure quite what happened from the article.  Everyone's talking about it being slow-pedaled presumably while they did the stress tests.  But at the minute this looks a bit over-egged given that all that was issued was 'an order to consider' dissolving Citigroup.  Can you disobey an 'order to consider'?

[Martinus]

Can you disobey an 'order to consider'?

Yes. By not considering it.

[Sheilbh]

Yes. By not considering it.

I mean just in terms of the words, I don't think you can avoid considering something once you've just read a memo or directive ordering it.

[Martinus]

Yes. By not considering it.

I mean just in terms of the words, I don't think you can avoid considering something once you've just read a memo or directive ordering it.

I was being facial fastidious.

[Admiral Yi]

this looks a bit over-egged

Suskind is the guy who wrote the book about Bush ordering people in the CIA to fabricate intelligence about Iraq.

[CountDeMoney]

Geithner was coming in for a lot of criticism at that point (possibly some of it briefed from the White House) but the truth is that firing your credible Treasury Secretary two months after coming into office, during a huge recession could have had some bad consequences and would certainly have smacked of weakness.

Yeah, you don't do that sort of stuff while it's going down.  Airing out the dirty laundry doesn't help.  You do that later, by accepting his resignation not continuing with a second administration if reelected.

Can you disobey an 'order to consider'?

No kidding.  Shit, I do that all the time.  Haven't been fired yet.

[CountDeMoney]

It's not like Obama had perfect freedom of action in this situation.

But Suskind is the guy who wrote the book about Bush ordering people in the CIA to fabricate intelligence about Iraq!

[Admiral Yi]

Suskind is back in the news.  One of his sources is claiming she was misquoted about how hostile a work environment the current White House is.

[AnchorClanker]

this looks a bit over-egged

Suskind is the guy who wrote the book about Bush ordering people in the CIA to fabricate intelligence about Iraq.

It wasn't just the CIA that was ordered to find "something, anything!"   
That took effect immediately after the inauguration, Feb 2001, IIRC.

Anyway, that claim is neither inflammatory nor incorrect - it did happen, whether people care to believe it or not.