[Guest post by Noam Scheiber:]
I've long been of the view that the Treasury secretary gets a bad rap despite some rather impressive accomplishments. That's true even when it comes to reforming Wall Street, where, despite some reservations, I think the administration dropped a pretty solid reform proposal last year. (In fact, to the extent the reform effort has been weakened in Congress, it's generally because it's drifted away from the principles the administration laid out.)
Still, you don't normally see Geithner get worked up about reform in public--or really about anything for that matter. He is nothing if not circumspect and understated. Or at least he was until yesterday afternoon at AEI, where he delivered a positively forceful speech about the need for reform, going so far as to take some well-deserved shots at reform opponents. To wit:
These are difficult issues and our legislators and their staffs often look to the financial industry for advice as they try to sort out what makes sense. This is important to get right but be careful whose voice you listen to.
Listen less to those whose judgments brought us this crisis. Listen less to those who told us all they were the masters of noble financial innovation and sophisticated risk management. Listen less to those who complain about the burdens of living with smarter regulation or who oppose having to pay a fee for the costs of this or future crises.
Instead, listen to the families and businesses still suffering from this crisis. Listen to those who borrowed responsibly but today can't get a loan or can't refinance their mortgage. Listen to those who lost their jobs and their healthcare and their pension savings. Listen to them.
Geithner also took on the way over-used and endlessly expandible argument that we can't reform Wall Street because it will create uncertainty (something I've pushed back against, too). Here he essentially turns the argument on its head:
Even with improving credit markets and reduced borrowing costs, when you talk to businesses across the country, they tell you that banks are lending less in part because they're not certain what new rules are coming. If you delay reform, you force them to live with that continued uncertainty.
And if the opponents of reform succeed in slowing this down – opponents who according to a report issued today are spending $1.4 million dollars every day to lobby Members of Congress; if the opponents succeed in stretching out the debate, they may think they're helping banks in the short run, but they will be hurting the customers of banks – American families and businesses.
Reform is not going to go away. If we don't get a strong bill now, here's what will happen: We're not going to move on to other things. We're going to keep fighting for reform. We're going to keep working with those who want a strong bill enacted into law.
But in the meantime, the rest of the world is going to move on without us. If we don't lead, others will. They will move to protect their citizens and their economies with rules that fit their needs. ...
I'll have more to say on this in a piece later this week. But, in the meantime, you really have to read the whole speech to appreciate it. Among other things, Geithner uses a time-honored TNR technique of quoting conservatives (like George W. Bush and Richard Shelby, the ranking Republican on the Senate Banking Committee) espousing reform principles that they're now running away from. It's an impressive display all around.