When Wall St. Calls, Geithner Answers
Executives from Goldman Sachs, JPMorgan and Citigroup Enjoy Frequent Access to Treasury Secretary, Schedule Shows
Even during his most frenzied days, when Congress is demanding answers
or the president himself is calling, Treasury Secretary Timothy
Geithner makes time to talk to a select group of powerful Wall Street
They are a small cadre of businessmen who have known and worked
with Geithner for years, whose multibillion-dollar companies all
survived the economic crisis with help from U.S. taxpayers.
When they call, Geithner answers. He has spoken with them
immediately after hanging up with President Barack Obama and before
heading up to Capitol Hill, between phone calls with senators and after
talking with the Federal Reserve chairman, according to a review by The
Associated Press of seven months of his appointment calendars.
The calendars, obtained by the AP under the Freedom of Information
Act, offer a behind-the-scenes glimpse at the continued influence of
three companies - Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc. - whose executives can reach the nation's most powerful economic official on the phone, sometimes several times a day.
There is nothing inherently wrong with senior Treasury Department
officials speaking regularly with industry executives, or even with the
secretary keeping tabs on the market's biggest players, even though
critics say Geithner risks succumbing too much to these bankers'
"It's appropriate for Treasury officials to keep in touch with
those who work in the markets every day, particularly when the economy
and the markets are so fragile," Treasury spokesman Andrew Williams
What the calendars show, however, is that only a select few can call the Treasury secretary.
After one hectic week in May in which the U.S. faced the looming
bankruptcy of General Motors and the prospect that the government would
take over the automaker, Geithner wrapped up his night with a series of
First he called Lloyd Blankfein, the chairman and CEO at Goldman.
Then he called Jamie Dimon, the boss at JPMorgan. Obama called next,
and as soon as they hung up, Geithner was back on the phone with Dimon.
While all this was going on, Geithner got a call from Rep. Xavier
Becerra, a California Democrat who serves on committees that help set
tax and budget policies.
Becerra left a message.
In the first seven months of Geithner's tenure, his calendars
reflect at least 80 contacts with Blankfein, Dimon, Citigroup Chairman
Richard Parsons or Citigroup CEO Vikram Pandit.
Geithner had more contacts with Citigroup than he did with Rep.
Barney Frank, D-Mass., the lawmaker leading the effort to approve
Geithner's overhaul of the financial system. Geithner's contacts with
Blankfein alone outnumber his contacts with Sen. Christopher Dodd,
D-Conn., chairman of the Senate Banking Committee.
Partly this is explained by the extraordinary clout of these
companies. Goldman, JPMorgan and Citigroup are among the dominant
players on Wall Street. Their executives can move not just markets but
entire economies. Treasury invested heavily in all of them to keep the
But size does not tell the whole story. Treasury has a huge financial stake in North Carolina-based Bank of America Corp., but CEO Ken Lewis appears on Geithner's calendars only three times. Morgan Stanley CEO John Mack also appears three times.
Geithner's relationship with Goldman, JPMorgan, Citigroup and their
executives dates to his tenure as president of the Federal Reserve Bank
of New York. As one of Wall Street's top regulators, Geithner worked
closely with executives and built relationships he brought with him to
his corner office at the Treasury Department.
The prominence of those relationships is clear by the company they keep on Geithner's calendars.
On March 24, just after Geithner announced plans to help banks sell off toxic debts
left over from the housing market meltdown - which stood to be a boon
for big banks - his calendars reflect a busy morning. He had a briefing
on terrorism financing, a meeting on tightening financial regulations
and a prep session for congressional testimony.
Geithner emerged to take just three phone calls, from Vice
President Joe Biden, New York Attorney General Andrew Cuomo and shortly
before heading to Capitol Hill, from Dimon.
Officials at JPMorgan, Citigroup and Goldman had no comment on Geithner's calendars.
Geithner's predecessor at Treasury, Henry Paulson, similarly kept
in close touch with Wall Street power brokers. Though his calendars
showed many contacts with bankers at the height of the banking crisis,
they showed frequent calls with Blankfein at key times. Paulson came to
Treasury from Goldman.
At the New York Fed and then at Treasury, Geithner helped put
together multibillion-dollar taxpayer bailouts for Wall Street
investment firms, including Goldman, JPMorgan and Citi. Even banks that
have repaid the money still enjoy massive subsidies. Their quick
returns to record profits and million-dollar bonuses sparked outrage.
Critics said the government was too quick to help the banks and was
unwilling to let them suffer the consequences of their bad bets.
Geithner's calendars could contribute to the perception that the
treasury secretary is too close to Wall Street, said Simon Johnson, a
former chief economist with the International Monetary Fund and
professor at the Massachusetts Institute of Technology's Sloan School
"Your worldview in the middle of a crisis depends on whom you talk
to and what their perspective is, and you need a broad cross-section of
opinions to truly understand what's happening," Johnson said.
By seeking information from such a narrow group of contacts,
Johnson said, Geithner risks limiting his exposure to the views of his
trusted banker colleagues.
Geithner must believe he can set aside their inherent biases, he said, adding, "I don't see how you do that."