Credible analysis of the 2008 crisis

Even though this book had received favorable reviews I was skeptical. Surely, I thought, Geitner would give a politicized, self-serving, and boring account of the events that lead to the 2008 crisis as well as the aftermath when he was one of the key figures. I was therefore pleasantly surprised by Geitner’s willingness to describe the dilemmas and the decision processes, including the mistakes that the FED made in the years preceding the crisis. For example, Geitner openly admits that the FED did receive hints that sub-prime mortgages were a potential risk in the economy, and that (in retrospect) they ought to have payed more attention to them. Geitner compares this situation with what happened before 9/11, saying that it is easy to say which warnings one should have attended to, after the disaster. Still, I never got the impression that Geitner was trying to cleanse away blame. He depicts himself as merely a hard working civil servant who does his best to serve his nation, and sometimes fails to make the best decision.

Geitner’s modest nature is also apparent when he describes his childhood. He says that he was not an exceptionally bright child, and that he was also lazy during his time in school and university. He also says he has always preferred to work in the background, and still does. The reason Geitner still ended up as head of one of the most influential offices in the world is, it seems, that he is good at working with other people and not afraid to say what he thinks, even to his superiors. People like Larry Sommers, could rely on the fact that Tim would tell them if he though a particular strategy was good or bad, and that seems to be a rare thing in those circumstances.

Geitner spends much of the book trying to explain what caused the financial crisis as well as how to handle such a crisis. Often there is a clash between what the public demands and what is good for the economy. When bank employees are getting large bonuses and banks are making profits after their actions has endangered the economy, the public often wants to see blood. They certainly do not want the government to go in and save such irresponsible individuals. Still, at least according to Geitner, that is exactly what needs to be done in some cases. It is either that or risking a far greater economic depression. In the light of this Geitner also criticises how the European Union has handled Greece. According to Geitner it is in general better to give them lots of money to get their economy up to speed. Instead the Germans are forcing the Greek citizens to save money. I am not an expert in these matters and I cannot tell whether Geitner is right, but it was interesting to hear his arguments.

Overall, this book will provide the reader with an in depth description of the events that lead to the 2008 economic crisis as well as the crisis itself, by a man who was right in the middle of the storm.

6 people found this helpful

Gripping

I have read several books recently on the financial crisis we are just coming out of. I read “On the Brink” by Hank Paulson the former Secretary of Treasury, “House of Debt by Alif Mian and Amin Safi, economist, describes the large amount of empirical research done since 2008. Now I have read “Stress Test” by Timothy F. Geithner whose book unlike the prior books provides an insider’s view point of the crisis. I am sure that this will be a controversial book and people will take sides according to their personal belief and only a few people will read it for the facts without judgment. Geithner served as President of the New York Federal Reserve from 2003 to 2008 and Secretary of Treasury from 2009 to 2013. Geithner starts the book with his childhood growing up in various countries as his father worked for the Ford Foundation. He says he learned to speak Hindi, Japanese and Chinese. Geithner describes his education at Dartmouth University and his graduate studies at the Graduate School of International Studies at John Hopkins. He tells about his personal life meeting his wife getting married having children. But he spends most of the book on his employment at the Treasury. He tells about his work in the International department working on helping countries with their financial crisis such as Mexico, Japan, Indonesia and South Korea. He says the lessons he learned helped him deal with the current worldwide financial crisis. Geithner goes into great detail about how the crisis development and people were caught off guard as people were complacent because of our long time of stability in the markets. He implies that greed and lack of proper inspections lead to some of the problems. He explains what was wrong, and how they attempted to fix or relief some stress on the markets. He goes into depth about the stress test they designed for the banks to avoid future problems. Geithner explains what attempts were made at legislation to prevent future problems along with what is good, adequate or poor and what is missing and needs to be corrected. The description of our dysfunctional government comes through crystal clear. He mentions Elizabeth Warren as she worked under him as temporary head of the new consumer bureau. I noted Warren was more interested in how the crisis was affecting the individual and Geithner was more interested in the institutions and countries. One of the biggest problems during the crisis was Geithner’s inability to communicate adequately. He has done an excellent job with this book so I wished he would have written his explanations and had someone read them maybe that would have gave us the confidence that comes with understanding. It is obvious from the book the man did his best in an extremely difficult situation.

12 people found this helpful

Way too long and arrogant

Extremely long-winded and highly partisan. On top of that, he is extremely arrogant. He makes it sound like he ran the government during the crisis and everyone else (including President Obama and foreign leaders) followed his lead.

The middle of the book contains good insight into the issues associated with the financial crisis, but the first and last several chapters are worthless...and the last couple of chapters are highly annoying.

2 people found this helpful

Surprisingly well read and well written account!

First, I am usually loathe to review a book I have not completed. Second, I usually prefer a professional narrator to the author's own reading. Last, my tastes have run towards classical fiction and opera in recent months, perhaps because I work in the bond markets and it isn't all that relaxing to keep on working during my commute as well as during a 12 hour workday.

All that aside, this is SUCH a fascinating account of Secretary Tim Geithner's life and work experience that I am breaking with habit and writing a review although I am only a few hours into the book.

Geithner is actually a pretty decent narrator considering what a mediocre public speaker he was, and continues to apologize for. He has a tendency to drop his voice a little at the end of sentences which forced me to repeat some of his reading - but that small flaw is quite manageable and shouldn't discourage even picky listeners.

The story of his life and experience is quite engaging and well-written. His background is unusual and his perspectives sharp. This audio reveals him to be quite different from person portrayed by the press or even his own public appearances during his tenure in office and he defends his decisions and positions well. I am really impressed by his ability to explain how and why things happened and his own justifications for actions taken.

As a bond market participant with a front seat on the financial crisis I enjoyed reading TOO BIG TO FAIL. But one of the most frustrating aspects of that book was its strict reportorial nature - it explained what happened minute to minute but provided no real analysis of why and what it all meant. This book exactly goes to the places I found missing in TOO BIG TO FAIL and that is the most satisfying part of the book for me.

Geithner's willingness to say exactly what he thinks when so much of what he did is politically unpopular with so many on both sides of the US political divide is the most addictive part of this listening adventure. I can only stop listening long enough to write this review. I very highly recommend it to those who value Geithner's perspective on earlier crises as well as the 2008 Financial Crisis and his tenure as the first Secretary of the Treasury for the Obama Administration.

11 people found this helpful

Very Worthwhile Read!

I have read a number of books on the 2008 Financial Crisis, and yet learned a lot from Mr. Geithner’s book. He emphasizes two key points that are critical for understanding why things became so serious:

1. The financial institutions that fueled the “subprime” crisis were highly leveraged. I already knew that, but had not appreciated the point that they were leveraged by means of extremely short-term debt—“overnight” repos in many cases. Thus, once confidence left the financial markets, these institutions were literally hours away from running out of money to pay their debts as they came due. Also important here is the fact that the most important players in the subprime market frenzy were “Wall Street” institutions outside the traditional banking system and thus outside the extensive examination and reporting requirements imposed on the traditional banks.

2. The financial markets were gripped by "Panic" once the players woke up and actually appreciated the fact that the subprime loans were not supported by any realistic credit review, but merely by the expectation that US real estate values would continue to rise and allow the loans to be refinanced. Once panic set in, investors wanted out period. They were not ready to analyze distinctions in credit quality, they simply wanted to avoid losses. That set in motion a vicious self-fulfilling cycle in which all tranches of CDO portfolios fell in value, buyers disappeared, and forced sales of securities through margin calls or funding obligations led to sales at “fire sale” prices and serious capital losses.

Mr. Geithner also addresses a point that most people (myself included) found very troubling in the government’s response to the financial crisis: the government’s approach of throwing lots of money and government guarantees at institutions who were clearly guilty of highly irresponsible management practices. In other words, these were institutions that deserved a punch in the jaw rather than taxpayer cash in their wallets. Geithner points out quite persuasively that although such sentiments are fully justified they are not useful responses to a financial crisis that endangers the whole economic system. “When the neighborhood is on fire, the focus should be getting the fire contained and out, rather than chasing down the arsonists who started the fire,” or words to that effect, is how he frames the issue.

I will add one point of serious criticism I have about the book. Mr. Geithner touches only very briefly and superficially on his role as head of the New York Fed in failing to
supervise properly the lending practices of Citibank and Citigroup in the run-up to the 2008 financial crisis. Citi was the only traditional banking institution (though it combined a large securities trading operation after the merger with Smith Barney) that had such large subprime loan exposures on its books that it has to be classified as one of the principal culprits in the irresponsible subprime lending frenzy. How did the NY Fed miss its exposures and why? There are no doubt important “lessons learned” from those questions that Mr. Geithner might have explored in depth but did not.

6 people found this helpful

A must of you liked "too big to fail"

Where does Stress Test rank among all the audiobooks you’ve listened to so far?

not the best it's actually hard to stop listening to it. Geithner is a convincing guy and it really makes you feel the stress and despair of the whole situation

What was one of the most memorable moments of Stress Test?

the moments just prior to the results of the stress tests to the bank

Was this a book you wanted to listen to all in one sitting?

yes, definitely

Any additional comments?

If you liked this one, you should read on the brink and too big to fail

8 people found this helpful

Excellent Read

Gives an excellent insight into the Global Economic and is Crisis and is well suited to the financial and economically literate and the layman alike. He makes the complexities attainable to the average reader and it’s interesting read all the way through.

1 person found this helpful

WORTH A LISTEN - ONE THING MISSING

Worth listening to. I appreciated the honesty and sharing weaknesses and failures.

The problem I have with this book is that Gietner asserts that GFC was basically overcome and fixed. He asserts that the tax payers got their money back from the bailouts. This is contradicted by the fact that the federal debt basically doubled between Obama getting into office and him leaving.

It seem to me that instead of fixing the GFC they simply printed trillions out of thin air to cover the problem and leave it for the next generation to pay for.

The US federal debt is now $20 trillion - this is a mind-blowingly big number and is basically unfixable without a major crash. So instead of fixing the GFC; Gietner and friends simply kicked the can down the road to our kids and grandkids.

3 people found this helpful

One gets the sense that Geithner wrote this for his critics.

The author narrates this Audible edition, and while he keeps his tone professional at all times (he was Treasury Secretary after all), the emotions that work their way through the pages are fascinating to observe.

The man was clearly scarred by the public's misguided perception of him and his colleagues, and it's easy to see why. I appreciate his efforts in trying to understand the position of the uninformed and the sceptical, along with his attemps in setting their perceptions right. Most people in similar circumstances opt to simply ignore and undermine their critics; Geithner meets them at eye level.

A negative consequence of writing to his critics is that their is very little in the way of sharing personal information, and he only touches on family issues a handful of times.

The book provides many answers to questions that students of the crisis might have, such as "why Bear and Lehman?" and "why not AIG?"

When not addressing criticism, Geithner dolls out valuable advice to future fighters of crises.

Critics of the policy responses to the crisis ought to add this book to their sources of knowledge along with Bernanke's memoir.

1 person found this helpful

Entertaining, Informative, Bias

What disappointed you about Stress Test?

I found it entertaining, but it was very bias and Tim's political views and opinion's are on full display, and HIS WAY always seemed to be the answer and the only way. He spent 18 hours and 20 minutes telling why his way of thinking was correct and 3 minutes at the end on what he did wrong.

What do you think your next listen will be?

Capitalism and Freedom

Which character – as performed by Timothy F. Geithner – was your favorite?

none

What reaction did this book spark in you? Anger, sadness, disappointment?

C'mon man

Any additional comments?

I liked the book quite a bit and found it very informative but It should be understood that this is simply an insider's interpretation. I just wasn't sure of Tim's intentions. If they were for the population or for the administration and the agenda.

1 person found this helpful