Should We Thank The Men Who Helped Rebuild the Neighborhood They Burned Down?

There’s little doubt that Hank Paulson, Tim Geithner and Ben Bernanke all played substantial roles in the build-up of the 2008 financial crisis.  After all, Paulson was in charge of Goldman Sachs, the lead horse during one of Wall Street’s greatest speculative run-ups ever.  Geithner played a key role at the NY Fed, an agency designated as one of the primary regulators of the very banks who nearly imploded the economy.  And then there was Ben Bernanke who was utterly asleep at the wheel as he drove the economy off a cliff in 2008.

So I am befuddled when smart people keep claiming that these men deserve some debt of gratitude.  My friend Mark Dow (someone I almost never disagree with) says we should all thank them:

“The bottom line is this: it worked wildly better than anyone could have hoped for—even for those of us who thought at the time it was the right course of action. Markets were stabilized, the private sector banking system was recapitalized at the end of the day with private sector money, and the US taxpayer pretty much got it for free—whatever you think the final bill will turn out to be. Anyone still trying to move the goalposts should be gently reminded that reality disagrees.

So, go ahead. Today is the right day to say it. Thank you Tim Geithner. Thank you Ben Bernanke. Thank you Hank Paulson. We were wrong. You were right.”

I don’t know about you, but when someone burns down your neighborhood, then helps rebuild it, you don’t turn around and praise them for their good work.  Not to mention, the neighborhood we seem to have these days is a mere facade of the one we once had….Thanks?  No thanks.

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • DanH

    The financial crisis and its causes are already a distant memory. Sigh.

  • Bond Vigilante

    Nothing structural has been solved. The US economy is still suffering under too much debt.

  • Observer

    Hear hear, Cullen!

  • krb

    I agree with your sentiments Cullen times 10. Where did Dow get his talking points…….Bernanke and Geithner? He obviously didn’t solicit input from the middle and lower classes and elderly before writing. It would take so little review of history to undermine his view it makes me wonder what his article’s point really is? krb

  • JLM

    Bernanke was especially culpable the way he undermined the Primary Dealers causing the blowup in the first place. We now should thank him for putting things back the way they were in the first place?

    OK Thanks for realizing your mistake and not stubbornly compounding it. Very reasonable of you! I guess we mere mortals should be grateful it didn’t turn out worse.

  • Greg W.

    What about the lowered interest rates due to QE? Savers are getting about 2% less than they deserve. Take the total amt of US savings and multiply it by 2% for each of the last several years. That’s what the banksters took from us…for starters.

  • Cowpoke

    Not sure where his information has come from, but he states Tarp has been fully repaid.
    However, inspector general for TARP, Christy L. Romero paints a different picture:

    “It is a widely held misconception that TARP will make a profit,” she writes right at the top of her 327-page report. “The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost).”

  • http://www.conventionalwisdumb.com Conventional Wisdumb

    http://en.wikipedia.org/wiki/M%C3%BCnchausen_syndrome_by_proxy

    Münchausen syndrome by proxy (MSbP or MBP) is a controversial term that is used to describe a behavior pattern in which a caregiver deliberately exaggerates, fabricates, and/or induces physical, psychological, behavioral, and/or mental health problems in those who are in their care.[1] Within the United States, factitious disorder by proxy (FDP or FDbP) is the leading alternative of this term, while in the United Kingdom, it is known as fabricated or induced illness by carers (FII).[2]
    With deception at its core, this behavior is an elusive, potentially lethal, and frequently misunderstood form of child abuse[3] or medical neglect[4] that has been difficult to define, detect and confirm.

    The name “Münchausen syndrome by proxy” is derived from Münchausen syndrome, but it is important to distinguish one from the other, as they describe very different (but related) conditions. People with Münchausen syndrome have a profound need to assume the sick role, and will exaggerate complaints, falsify tests, and/or self-inflict illnesses.[5] MSbP perpetrators, by contrast, are willing to fulfill their need for positive attention by hurting their own child, thereby assuming the sick role by proxy. At times, they are also able to assume the hero role and garner still more positive attention, by appearing to care for and ‘save’ their child.[6]

  • Johnny Evers

    Awesome.

  • KC

    How can Dow claim everything worked out? We are still in crisis mode. A final verdict can not be made until the Fed balance sheet and the Fed funds rate are normalized. That’s like saying everything went better than expected as the eye of the huricane is passing over head!

  • ReturnFreeRisk

    The final chapter on Bernanke’s legacy is yet to be written. The long term consequences of needless risk taking and misallocation that he will have single handedly engineered by the time he leaves public service will be immense.

  • http://www.deltafinancials.com Delta Financials

    Hear, hear. Well said, Cullen.

  • drewburn

    I somewhat disagree. It is the degree of risk to taxpayers, which was huge. I don’t think were repaid adequately. Per Barry Ritholtz, I thing a “harder” bailout was in order. Wipe out equity, severe haircut to bonds, and fire top tier management. Bernanke gets off a little easier in my book, but the other two……especially Paulson, no.

  • Lucky Foot

    More is coming to haunt us – Bernanke & Paulson already know this. Geithner may not have the noggin, nor the care, of knowing the consequences of his foolishness.

  • Cowpoke

    Bravo, Bravissimo……….. ;)

  • CuriousLurker

    Ummmm…… let me go ask my Brother-in-Law who lost his job (28 year employee)in 2008, or my Brother, who lost his job (16 year employee) in 2011.

  • Blobby

    Did you expect anything else, but pats on the back all round from the cronies.

  • JensenAlphaMale

    “There’s little doubt that Hank Paulson, Tim Geithner and Ben Bernanke all played substantial roles in the build-up of the 2008 financial crisis.”

    Really? And what is that? Almost every authoritative economic source on the matter shows that the RE bubble and financial crisis had roots that go as far back as 30-40 years of policies. Yet individuals who had been in place for a max of 4 years had “substatial roles”? The only role they played, was cleaning up the mess.

    Oh and your attempt to place guilt by association is hilarious. Just because someone works at a specific organization, they take key blame? Monday Morning Quarterback-ism at it’s finest here.

  • EconFan

    I agree with this. for starters – what about Greenspan ; or those who repealed Glass-Steagall; or regulatory leassons not learned from the S&L bailout of the Reagan years. I think ideologically driven dismantling of regulations made the system highly non-linear – so butterflies can create black swans.

  • http://www.orcamgroup.com Cullen Roche

    Come on. Geithner was the President of the NY Fed from 2003 until 2009. Bernanke was a member of the Board of Governors from 2002-2005 and then head of the Fed from 2005 on. Paulson was the Chief at GS from 1999-2012. Their careers don’t merely span the brief blip you portray. They were all key players in the crisis. I am certainly not blaming them alone, but do they deserve thanks? Not in my opinion.

  • InvestorX

    “Paulson was in charge of Goldman Sachs, the lead horse during one of Wall Street’s greatest speculative run-ups ever. Geithner played a key role at the NY Fed, an agency designated as one of the primary regulators of the very banks who nearly imploded the economy. And then there was Ben Bernanke who was utterly asleep at the wheel as he drove the economy off a cliff in 2008.”

    Very well said!

    “So I am befuddled when smart people keep claiming that these men deserve some debt of gratitude.”

    This is the age of entitlement. Mediocre leaders, having risen to the levers steering the country deserve praise just because they are there (and multi-million bonuses for that).

  • krb

    ….and Timmy Geithner was on Rubin’s staff when Glass Steagall was repealed. His multiple roles in lead-up to and lengthening of our global depression……Glass Steagall repeal, failed oversight while NY Fed presiedent, middle/lower class and elderly oppression as he funnels all support to failed banks……will have history define him as a failure of epic proportions. His incompetence and bank centric view of the world will at least match that of Greenspan and Bernanke. krb