Stress Test -- Reflections on Financial Crises

by Timothy F. Geithner

New York Times BestsellerWashington Post BestsellerLos Angeles Times BestsellerStress Test is the story of Tim Geithner’s education in financial crises. As president of the Federal Reserve Bank of New York and then as President Barack Obama’s secretary of the Treasury, Timothy F. Geithner helped the United States navigate the worst financial crisis since the Great Depression, from boom to bust to rescue to recovery. In a candid, riveting, and historically illuminating memoir, he takes readers behind the scenes of the crisis, explaining the hard choices and politically unpalatable decisions he made to repair a broken financial system and prevent the collapse of the Main Street economy. This is the inside story of how a small group of policy makers—in a thick fog of uncertainty, with unimaginably high stakes—helped avoid a second depression but lost the American people doing it. Stress Test is also a valuable guide to how governments can better manage financial crises, because this one won’t be the last.Stress Test reveals a side of Secretary Geithner the public has never seen, starting with his childhood as an American abroad. He recounts his early days as a young Treasury official helping to fight the international financial crises of the 1990s, then describes what he saw, what he did, and what he missed at the New York Fed before the Wall Street boom went bust. He takes readers inside the room as the crisis began, intensified, and burned out of control, discussing the most controversial episodes of his tenures at the New York Fed and the Treasury, including the rescue of Bear Stearns; the harrowing weekend when Lehman Brothers failed; the searing crucible of the AIG rescue as well as the furor over the firm’s lavish bonuses; the battles inside the Obama administration over his widely criticized but ultimately successful plan to end the crisis; and the bracing fight for the most sweeping financial reforms in more than seventy years. Secretary Geithner also describes the aftershocks of the crisis, including the administration’s efforts to address high unemployment, a series of brutal political battles over deficits and debt, and the drama over Europe’s repeated flirtations with the economic abyss.Secretary Geithner is not a politician, but he has things to say about politics—the silliness, the nastiness, the toll it took on his family. But in the end, Stress Test is a hopeful story about public service. In this revealing memoir, Tim Geithner explains how America withstood the ultimate stress test of its political and financial systems.From the Hardcover edition.

Genres: Economics, Finance, Business, Nonfiction, History, Politics, Biography

592 pages, Hardcover

First published January 1, 2014

About the author

Timothy F. Geithner was the seventy-fifth secretary of the U.S. Department of the Treasury and previously served as president and chief executive officer of the Federal Reserve Bank of New York. He wrote Stress Test: Reflections on Financial Crises as a distinguished fellow at the Council on Foreign Relations.

Reviews

[Kristy · Rating 4 out of 5]

This was yet another book I would not have picked up if not for Bill Gates. I find the financial world boring and have never had a desire to read about it. Yet Stress Test takes the 2008 financial crisis and presents it in an almost captivating way.

Geithner was the head of The Fed when the crisis first broke and later became Secretary of Treasury under President Obama. He details the behind the scenes of what was the worst economic and financial crisis since The Great Depression. While some of the content was over my head, for the most part Geithner does a great job explaining what happened in a tangible and easy to understand way.

I highly recommend this book. It is real and honest about the successes and shortcomings of our (American) government during that turbulent time and it sheds light on how the financial system works.

[Trish · Rating 4 out of 5]

Unelected Secretary of the Treasury Timothy Geithner had more influence on the thoughts and motivations, successes and failures of ordinary Americans than Congress ever did in the years he was in office. While Congress played politics (and not very well at that), Geithner did a lot (some might say too much) with his global role as fire extinguisher.

And who was he? Those of us just watching his pronouncements and public speeches, or feeling the impact of his decisions really did not have a good picture of the man orchestrating the mayhem. Stress Test goes some way to explaining how he moved from President of the Federal Reserve Bank of New York when the monetary crisis began to become U.S. Secretary of the Treasury in 2009, and what he was thinking as the crisis unfolded. It is not a book written for Wall Street insiders. It is written with the general American public, Europe, and other countries in mind. It is, in some sense, a White Paper on the crisis, telling of personalities, events, and lessons learned. It is well worth the time invested to read or listen to it.

Two thoughts competed for precedence as I listened to Geithner narrate the Random House audiobook production of his book. One was that he really is just an ordinary man in extraordinary circumstances. He didn’t have a background in finance; he studied international affairs at Johns Hopkins. He never worked in the finance industry before getting a government job at Treasury in the International Affairs Division in the 1980's. There he met Rubin and Summers, and was named Under Secretary of the Treasury for International Affairs in 1998.

The second thought that rivaled the “ordinary guy” theory was that he does has an extraordinary calm and one-or-two-steps-at-a time pragmatist mentality, a willingness to go “all in,” and a lack of interest in the trappings of wealth creation. I remember coming away from Robert Gates’ memoir thinking that only those that don’t want the fame and fortune that comes with vaunted public service must be the ones chosen to serve. (Remember Sam Nunn? He did his duty, oh so well, but he appeared to hate the limelight.) And Geithner must be an impressive thinker and proponent of his thinking in person and in writing, despite or perhaps because of, his measured and sometimes turgid prose. He consistently had strong supporters and powerful mentors all along his path. That doesn’t happen to everyone.

Something we may not value enough is his ability to withstand withering abuse from those who disagreed with him. While there may be, and undoubtedly will be, many who could do his job, not many could handle a crisis of that magnitude while listening, adjusting, and holding firm when necessary. It was a labor of love, doing that job at that time. It occurred to me that some who recommended him for the job wanted someone else to handle the crisis—to be a fall guy.

Somehow I remain convinced that disagreeing with his handling of the crisis (injecting cash, propping up illiquid banks, and overseeing TARP) needn’t have boiled over into personal attacks. It would have been far more useful to him and to all of us if those with reasonable alternative ideas could have presented them in a civil manner. The market scare showed us unfit and fat, at our ugliest. Nothing would have made me happier than to see the banks fail, if it weren’t that we were all involved.

Geithner’s method, though he freely admits it created “moral hazard” along the way, did bring us back with limited pain and loss, to a market higher than ever in a remarkably short period of time. If anything, this may be the thing that worries me the most. One could argue now that the cash injected into the system allowed us to paper over some of the inequity issues we face, despite changes made to the regulatory system. That someone makes an outsized salary can be remedied by tax reform, but the politics have become even more contentious and disabling. What worries me is that there weren’t enough lessons learned by the folks who needed to learn them.

Histories of the financial meltdown in 2007-2008 we have heard before, but what we learn from Geithner’s personal history is how the crisis looked from his desk, what he was thinking, who he was talking to, and how, as the crises widened, his perceptions changed or crystallized. This type of meltdown crisis will probably happen again, especially if our political system continues to fail. We may not use the methods Geithner used to repair the damage in the future, but everything he did will be considered in the next crisis, combed over and debated, regardless of political affiliation and ideology. This is because pragmatism really does trump ideology in a crisis, no matter what the pundits and politicians say. We wouldn’t want it any other way.

[Vicar Sayeedi · Rating 4 out of 5]

High Marks for Firefighting. Low Marks for Fire Prevention

Thus far, I've managed to read about ninety percent of Secretary Geithner's new book, "Stress Test". At nearly six hundred pages, this tome is a first-hand account of the 2007 financial crisis that nearly upended the US financial system, forced millions of American homeowners into foreclosure and resulted in millions of lost jobs.

I think Secretary Geithner's book reflects humility and balance in that he acknowledges the mistakes that he and other senior government finance and economics officials made during the crisis (US Treasury, Federal Reserve Bank of NY and Board of Governors - Federal Reserve System). I feel that Secretary Geithner, Secretary Paulson and Governor Bernanke (and their staff) deserve high marks for their tireless efforts and skill in working to contain the catastrophic situation that materialized once the sub-prime lending market and related securities began to collapse but I'm also feeling that there's a lot to be done with regards to preventing these sorts of financial meltdowns in the future.

Secretary Geithner pointed out in his book that Governor Volcker believes that the last useful innovation to come from the banking and financial services industry was the ATM. He has also pointed out that Warren Buffett believes that derivative securities are financial weapons of mass destruction. Yet, we see no effort by the US Congress or banking and financial services regulatory agencies to do anything to restrict such highly unpredictable, insidious and destructive instruments from the marketplace.

I believe we need a coordinated effort across the G20 to disallow these variants of Russian Roulette rather than trying to manage them. Mike Tyson had said that all boxers have a strategy until they get punched in the face. After that, everything changes. We have to acknowledge that derivative securities are far too dangerous, unpredictable and unmanageable - unfortunately, Secretary Geithner seems unwilling to concede on this issue.

[Stuart Woolf · Rating 4 out of 5]

Tim Geithner is one of few (very few) Beltway insiders I have ever followed on Youtube. He's an awkward but strangely captivating public speaker, a humble but competent bureaucrat who rises above the political theater of Washington to deliver pragmatic solutions to our economic woes, most often in an exasperated monotone. He's very down to earth, an easy guy to like.

His book does not disappoint: throughout the text, Geithner candidly admits what his weaknesses are, fairly assesses the successes and failures of America's response to the financial crisis (conducted under his watch), and comprehensively describes the powers and limitations of the Fed, Treasury, and other regulatory bodies. Geithner, nominally a Democrat, avoids ideological pandering and derives his insights from experience and personal observations over the course of a 20-year career in public service.

To Geithner, financial crises are caused when borrowing (or leverage) outpaces economic growth and capital moves to unregulated markets. They are resolved when swift, overwhelming capital injections sufficiently restore the health of the financial system, allowing insolvent banks to fail in isolation of those that are merely illiquid and salvageable. The key is to restore confidence in markets by demonstrating a serious resolve to repair them despite moral hazard concerns (and assured political fallout) because, ultimately, the alternative is worse. (The opposite solution, austerity, is demonstrated by Europe's sluggish recovery and skyrocketing unemployment rates.)

Admittedly, much of the subject matter is pretty abstract, but there are interesting portrayals of famous figures and illuminating critiques of the political games played on Capitol Hill. Overall, a compelling read. My only reservation is Geithner's weak response to the AIG bonus scandal: it was totally preventable, raised valid moral hazard concerns and was obviously a public relations nightmare. It would have been a quick, easy, and relatively inexpensive fix if Geithner had not confused talent with egregious mismanagement.

[Brad Feld · Rating 5 out of 5]

This was the heavy one of the trip – it took three days. Geithner has always been a cipher to me so I figured his autobiography and memoir on the financial crisis would help me understand him better. He did an amazing job with this book, both explaining what happened while explaining himself. The depth of his own introspection and understanding of his own being came through in the midst of incredible pressure and crisis. Once you realize he’s a deep introvert in a context that begs for extrovert energy, a lot of the puzzle pieces about him slide into place. After reading this book, I’m glad he was at the head of the NY Fed and the Treasury for the past decade. Regardless of your position on what went down during this time, this is a book worth reading for a clear perspective from Geithner’s point of view.

[Mehrsa · Rating 4 out of 5]

If you’ve read the books and academic articles or even watched the movies about the financial crisis, you’ve mostly heard a unified and compelling narrative. On the cynical end, Geithner, Paulson, and Bernanke were Wall Street cronies in bed with the largest banks, the vampire squids like Goldman Sachs, and they used taxpayer money to bail them out. The more generous and nuanced view is that they made unprecedented moves to bail out TBTF banks because the big banks had too much power and sway over them.

Geithner’s cleverly-named “Stress Test” is the Treasury Secretary’s attempt to convince us that everything we believed was wrong. (You can feel the struggle of Geithner trying to pull at the dominant narrative by watching the painful and uncharacteristically not-funny 45-minute interview with Jon Stewart .) Geithner sat at the very center of the storm from beginning to end. First as head of the New York Federal Reserve, the regulator most entwined with the Wall Street firms, he oversaw the early rumblings of crisis as well as the rescue of Bear Stearns and the failure of Lehman Brothers. Then, as Treasury Secretary, he oversaw TARP, the auto bailout, Dodd-Frank and every other aspect of the financial rescue. Geithner knows what we think happened and he addresses each of our facts with other facts, each opinion with an insider’s take and each objection with a “reality check.” He did not want to bail out banks for the bank’s sake. He expresses disdain for their excess, stupidity, and herd behavior. He wants us to know that his team bailed them out to save the economy and the public from their collapse. The fear that drove him was not Wall Street failure, but America’s demise. He and his team were convinced that “there would have been shantytowns again” if they mishandled the crisis. And once the war was started, it was necessary to use "overwhelming force."

Geithner is not an arrogant hot-head as all the public accounts seem to indicate (See books by Neil Barofsky, Sheila Bair, and even Warren). He comes off as humble and down-to-earth. His greatest flaw, and it’s a big one given his position, is that he lacks the gravitas and clarity to speak to the public and instill confidence. His signature is on all of our paper money and he sits at the center of a monetary system that is based purely on public trust. He readily admits that that is the one thing he “sucked” at. (He says the night before he started as Chairman of the New York Fed, he was carded when he tried to buy a beer). He is so aware of his failures in this arena that he runs through a list of media criticisms of some of his biggest public speaking flops, like the speech he gave about TARP that set off a stock market sell-off-- a speech that the Wall Street Journal commentator described as “Shock and uh.” He repeats these quips and more to “marinate” us in his shortcomings, which he also did with the President before he appointed him as Treasury Secretary. Geithner describes himself as an ordinary guy with average grades and average ambitions--or none, really. He goes to work for the government because he didn’t have a clear sense of what he was good at, didn’t want to go to Wall Street, and because that’s what his dad did. Unlike almost every other memoir or autobiography, Geithner doesn’t offer any past narratives colored by the present—he didn’t for example, realize he was “good with money” by running a lemonade stand and he didn’t learn how to deal with crisis because of his childhood spent living abroad. His narrative is an honest, just-the-facts story without much self-reflection or moralizing.

Geitner’s basic message is that he and his team were first responders in a financial collapse and their goal and major achievement was to prevent the U.S. financial system to go over a cliff. His book demands that we measure their success by that metric. They saved us from collapse and earned a profit to boot! What’s everyone whining about? He calls some of his critics “populists,” “moral hazard fundamentalists,” and those who wanted “Old Testament Justice.” Geithner had no time for such grandstanding and rhetoric. He keeps repeating: “plan beats no plan.” He had a fire to put out and he was singularly focused on putting it out. His mantra was “no more Lehmans.” According to Geithner, his failure to bail out Lehman, due in part to the Brits dropping the ball and not having enough authority, was the avoidable problem that set off an irrational panic. In this account, it’s hard to argue that Geithner was nothing short of heroic--or as Michael Lewis says, “unusually brave.” He steered a sinking ship to safety by putting his head down and working tirelessly despite relentless criticism (and mockery) from all sides.

But if Geithner is the hero in this story and the bailouts were the only thing between us and another Great Depression, then why is it still so hard to feel grateful? Part of it is that many people are still suffering. But the other part is that any story in which the protagonist saves us all from disaster by giving cash to big banks is not a story that can easily put us at ease.

Geithner is invested in writing the history of the crisis from his perspective and he is honest and thorough as he does it, but maybe what he views as noisy naysayers and “fundamentalists” weren’t just obstructionists who didn’t appreciate the gravity of the situation. Maybe they just wanted to play a different game.

Elizabeth Warren’s “A Fighting Chance” is an account from one of those populists demanding “Old Testament Justice." “No perp walks. No mass indictments ... Where were the armies of auditors, seizing hard drives and poring over the financial statements?” (Although Warren’s book reads much more like a campaign book—it’s basically “Dreams of My Father” and “Audacity of Hope” rolled into one—short on details and heavy on grandkids, dogs and peach cobbler.) If Geithner’s repeated mantra is “No more Lehman’s” and “haircuts are always a bad idea,” Warren’s is: “the game is rigged.”

Geithner played by the rules of the game to achieve the goals of that game and he did a great, even heroic job. And Warren wants to change the rules of the game so that “winning” has nothing to do with bank profits. She refers to Geithner in her book as someone who always had her back, but whose main interest was to “foam the runway” for banks--make the crash landing as painless as possible and return them to profitability as quickly as possible. And this is where Geithner’s background does prove something. Geithner was not a Goldman executive as everyone thought. He makes this clear over and over again. He was not a Wall Street guy. But he was an umpire in that game. It’s possible he spent so long marinating in the rules of that game, that he couldn’t see anything past the stadium.

Warren talks about a Time magazine cover in which she, Sheila Bair (FDIC), and Mary Schapiro (SEC) are labeled “The New Sheriffs of Wall Street.” Why were the Sheriff’s of Wall Street all women, she muses, when the majority of Wall Street all men? Because they weren’t invited into the stadium--they were outsiders: “I had never inhabited the world of high finance, never played golf with a foursome of CEOs, never smoked cigars at the club. Some people argue that if you are never in the club, you can’t understand it.” The financial system and the crisis are so complex that few people inside or out understand it and Geithner defends himself against the attacks by saying that people just didn’t understand the complexity or the stakes. He is critical of both Sheila Bair and Brooksley Born (former CFTC chairman who proposed that derivatives should be regulated when no one else saw them as a threat). Geithner’s condescending analysis is that Sheila just didn’t understand the problem they were dealing with and Born’s proposal for regulating OTC derivatives was “noble,” but she lacked a “concrete and plausible plan.” Warren, he says, didn’t have a workable plan that was better than his--and “plan beats no plan.”

In a democracy, dissent can’t just be dismissed because it comes from outsiders "without a plan." And complexity isn’t a shield from criticism. It’s clear that Geithner did everything he could do. Everything except ditch the play book. Or ask foundational questions: were the Wall Street banks actually providing a benefit to the economy? Why funnel the rescue through the banks in the first place? Is our current banking system the right intermediary for credit? Warren, on the other hand, does just that because as she says “not being in the club means never drinking the club’s Kool-Aid. I had studied the banking system from the outside so none of it was sacred to me.”

In the end, I was surprised by how much I actually liked Geithner. And I’ve never believed that the game was “rigged.” Or at least no one is doing the rigging—no “bad guys” or vampire squids. Just a dogma so pervasive that everyone on the inside seems oblivious to life outside the sacred walls of Wall Street finance. And like religious fundamentalists, all challengers to their faith are seen as wrong or misguided. But we don’t live in a Wall Street theocracy and we need to have a public discourse about what kind of banking system works for all of us.

[Jean · Rating 4 out of 5]

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 pre-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.

[Edgar Raines · Rating 5 out of 5]

This is an important memoir by one of the most consequential cabinet officers of the first four years of Obama presidency. Geithner's main theme is the necessity of protecting the financial system in a full-blown financial crisis forces policy makers to take counter-intuitive measures, such as government borrowing to shore up institutions whose reckless lending contributed to the crisis. This is a thought-provoking, meaty memoir, certain to have a major impact on early historical accounts of the Obama years.

[Aaron Million · Rating 5 out of 5]

Timothy Geithner has not written the typical Presidential Cabinet Secretary memoir. What does that mean? It means that this book is not written by a politician, trying to skirt around difficult subjects and personalities, worried about either offending someone or possibly having negative political repercussions come in the future. That is because Geithner, Barack Obama's first Secretary of the Treasury, is not a politician nor a Washington insider. The result is a refreshingly candid autobiography, full of personal anecdotes, self-criticisms, and criticisms of those that he had to work with in some capacity or another.

The first half of the book actually revolves around Geithner's youth, early work experience in the Treasury Department, and then his time as head of the New York Federal Reserve. Relatively young for the position, Geithner throws himself into his work, much to his family's dismay. Indeed that is a recurrent theme throughout the book: personal sacrifice. Geithner actually didn't think he had the requisite experience for the NY Fed job – he was not a trained economist like almost all of his peers were. Geithner was at this job when the economy collapsed in late 2007 and throughout 2008. He has to work closely with George W. Bush's Treasury Secretary, Henry Paulson, and Chairman of the Federal Reserve, Ben Bernanke. Geithner put in a grueling, never-ending stint of long hours, nights spent sleeping on a cot in the Fed office, and not seeing his family. This does not come across as complaining, but rather as him showing that he and many others were devoting all of their energies to trying to stem the crisis, while simultaneously being vilified in the media.

This actually becomes a major theme in the book: how he and anyone else involved, would get hit from all sides. The media constantly attacked him for allegedly being too close to Wall Street, and favoring the bankers over the ordinary citizen who was struggling. Republicans, as sadly they all too often do now due to the far-right taking over their party, come across really poorly here: craven, disingenuous, and beholden to special interests. While Geithner does criticize them a lot, he does not leave the Democrats basking in a halo of glory. He repeatedly writes about the far-left attacking him for not going far enough in some of his fiscal programs. It seemed that he had a thankless job; no matter what he would say or do, it would be too much for one side, but not enough for the other side. In that respect, it reminded me of reading Henry Kissinger's memoirs: he made the same complaints – that it was almost impossible to appease everyone (side note: Geithner actually started his career working for Kissinger).

It was disappointing, but sadly, not surprising that Congressional Republicans almost to a member refused to put the nation's interests ahead of their own narrow political interests. Geithner writes how Mitch McConnell flat-out told him that he was going to oppose everything that Obama would try to do, because it would help the Republicans politically. Obviously, things have deteriorated rapidly since then, when you look at what is currently happening in the country. Geithner, not being a politician, seems shocked at the blatant partisanship. While he was in sympathy with Obama's agenda, he was not even a registered Democrat, although his views increasingly aligned with moderate Democratic politics. Geithner probably should have had an inkling this was coming, based on what he saw occurring during the tail-end of the Bush administration.

There were a few areas that I would have liked to have read about, but Geithner ignores. One of those is his take on his fellow Cabinet Secretaries. They are completely absent from the book, aside from a couple of passing references to Hillary Clinton. This somewhat surprised me at first. Not one single Cabinet meeting is mentioned. Did Geithner loathe these affairs? Did he not get along with the other Secretaries? After reading the book, I doubt that. I think it is more a case of: they were not integral cogs in what his mission was and how he needed to accomplish it. And, not really being a political person, he probably did not much care what was going on in other departments unless it directly affected the Treasury. Two other areas that Geitner does not really touch on: how much he interacted with Bernanke once he (Geithner) became Treasury Secretary. And also, Paulson basically disappears from the narrative. That made me wonder: since they worked so closely together when Paulson was Secretary, didn't Geithner still consult with him? One would think so, but Geithner does not bring it up.

Thankfully, Geithner writes smoothly, and does not inundate the reader with complicated economic formulas. Some of the concepts and terminology can require some extra patience to fully understand, but he tries to relate what he was doing to common, everyday items such as untangling a pot of spaghetti. And occasionally he throws in some wry humor. Example from page 41: “While our work didn't make big news at home – the only major story that broke on my watch was President [George H. W.] Bush vomiting on the Japanese Prime Minister – I felt like we were making a difference.” I wish more autobiographies were as interesting to read as this one was. If you have any interest in the financial crisis of 2008, the Obama administration, or the workings of the Treasury, I think you will find this a thoughtful and enjoyable read.

Grade: A-

[Aloha · Rating 4 out of 5]

Highly recommend this to realize that getting things done in Washington is not as easy as you think, even when the financial world was on the verge of crumbling and the Great Depression seemed eminent. Checks and balances, political pressures and public ignorance all contribute to the difficulty. The book sometimes sound like a boosting of the Obama side but overall informative.

[Bryan Craig · Rating 4 out of 5]

If you are looking for a highly read-able account of the financial crisis, this is a good one.

[thewanderingjew · Rating 2 out of 5]

Stress Test, by Tim Geithner, was read by Mr. Geithner. He reads in an uneven tone of voice, often in a monotone, and truthfully, I fell asleep no less than three times during the time I listened to this book.
I gave it two stars, which I consider a generous rating, only because of the effort expended. The book seemed to be nothing more than a disingenuous “apology tour” to his wife and a reaffirmation of his belief that he made all the right decisions, if only those who were ignorant could have understood his purpose. He attacked the Bush administration and the GOP while he worshiped at the feet of President Obama and his cronies without admitting their responsibility in the debacle that the White House faced. It was a biased presentation of the facts that will be much loved and appreciated by Liberals who agree with President Obama’s extremely “Progressive” policies. It was not a fair representation of the truth, but it was a representation of Geithner’s interpretation of the truth. Those who disagree with his presentation will be hard pressed to finish the book; I know it was an extraordinary effort for me to complete it. Somewhere in his diatribe of complaints and protestations, there are some facts worthy of consideration and thought.
He presided as Secretary of the Treasury during a troubled time, but it was not a surprise for him. He knew the playing field when he accepted the position as Obama knew what awaited him when he ran for office. To pretend differently, is to be intellectually dishonest. Geithner uses hackneyed phrases and trite references to illustrate his points. His language is crude and I often found it offensive.
Although he was supposed to be non-partisan in the post he occupied, his decisions were most often made for political reasons, whether it was because of those around him or himself, that was the end result. The security of the country and the well being of the people often took a back seat to the personal demands of the powers that be. To Geithner, there were no differences of opinion, rather there were those who didn’t understand the problem and those who simply wanted to thwart the efforts of the President he revered so highly, those who simply refused to do anything that might advance his agenda. Often, opposition was not given a chance to even voice an opinion, and therefore, the opposition refused to march lock step, like lemmings, to support his wishes. He insulted those who disagreed with him and even when he admitted that his fellow democrats were also intransigent, he always offered a codicil which reinforced his belief that the Republicans were far worse. Geithner adores Elizabeth Warren, and I was getting the feeling that he was promoting her, if not in the next Presidential election contesting Hillary Clinton’s run, than in the one after it, in 2020.
Geithner had to face the danger of a situation which might cause the nationalization of the banks, the default of the government with a government shutdown, the mortgage meltdown, the failure of Dodd/Frank, a time of enormous unemployment and the smallest workforce in recent history. He witnessed bank failures and a sinking car industry. He tried to prevent the failure of Bear Stearns and Aig. He watched as Lehman failed. He was not empowered to save them with an infusion of money, and yet, after that failure, the law was changed. Was that by design? He saved Fannie and Freddie, even though Senator Frank presented their balance sheet as solvent when he appeared on television, contrary to the reality of their state of affairs.
He was stubborn and uncompromising most of the time. He uses the book to praise Obamas achievements, although he is becoming better known for his fund-raising and campaign skills, rather than for his ability to govern, take charge, and/or offer Americans a sense of safety. He often seems distracted and unaware of the importance of his job and how he presents himself to the world, with strength or with weakness, and he often takes the weakest approach and reduces America’s influence on world events, but to Geithner, Obama’s failures are due to his enemies. To accomplish his goals, Geithner often threatens his opponents with repercussions and/or uses the race card to change the narrative, when in fact it is his policy not his color that is at issue. Geithner expresses distrust and dislike for the Tea Party because they oppose his policies and he hates the inability of Congress to act effectively. The Tea Party is becoming the replacement for Tina Fey’s Sarah Palin as an object of scorn. He blames the GOP and pretty much gives the “Donkeys” a pass, even though Senator Reid has not even allowed many of the recommendations of those on the right to be brought up and considered for a vote in the Senate.
Although Geithner did achieve some positive results, he blames his failures on others, even as he admits them. The book was therefore redundant and, at times, boring. He too often tried to prop himself up, even as he complained that he was unqualified for the jobs thrust upon him. His humility did not seem genuine since he often threw mud at others to explain his failures. If you disagreed with him, you were wrong, evil, disruptive, a saboteur. Both Geithner and Obama ridicule those that do not agree with them. Compromise and negotiation do not seem to be their strong skills. I felt that retribution was the objective, rather than the accomplishment of goals through conciliation.
He seemed to ignore the amoral behavior of those who brought down our financial system, like the over leveraged and under “down-paymented” home owners, and the politicians who passed laws that practically forced the banks to make loans to unqualified buyers. He supported those who gamed and raped the system, bailing them out while standing by as those who followed the rules were got hurt and were forced to take up the burden for those who brought about the debacle. He was completely unrealistic about what was right and wrong and just wanted to deal with the problems of “left and right”. Pretty much, the only politicians he embraced were left of left. He makes a statement that President Obama believed policy would trump politics which is contrary to a White House that dwells on optics and party politics, first and foremost.
For sure, I did not understand all of the information presented, but I did get the main idea and was very disappointed by the presentation. A government which is supposed to represent everyone was being advised by someone who seemed to believe his most important job was to protect the President, rather than the country. He spent most of his time bashing Republicans and praising Obama and the Democrats. It was the most partisan presentation of any book I have read by a government servant. He was a cheerleader for himself and the sacrifices of his wife and family, and for what he perceived as a President who was trying to do right by the country. Today, it would seem that the situation in the world may fly in the face of that premise.
In summary, the book is basically a defense of his behavior during the banking crisis which required an enormous stimulus to prevent a depression, which it did successfully. He largely ignores the responsibility of his own party in bringing about this debacle for Americans to face. He complains about his work load, an intransigent Congress, the morass of the political process, and his lack of family contact. He pretends to be unbiased, but he “protests too much”. He completely disregarded the culpability of the Democrats when they repealed Glass-Steagall which helped to bring about the banking debacle that created a situation which almost destroyed the world’s economy as well as our own.
If you are a liberal and really want to read this book, make sure you select the print copy. The audio is not the way to go. It is a cure for insomnia.

[Joseph · Rating 5 out of 5]

I wish I had looked at the notes at the end before I read this book. It would have made it easier to follow. I read the Kindle edition and did not realize that the notes explained some of the terms that I actually took the time to check. The notes explained the terms better than several sources I consulted.

The book started slowly for me and picked up steam as it unfolded. About halfway through it became a ‘page turner.’ Having now read the notes AND acknowledgements, I realize that the book was very much a collaborative effort, in fact, you might say a book developed by a team. I am just a little bit -- not sure what the right word is -- jealous. I mean if I could bring in several people who served with me at various points of my 27 year Air Force career, I could probably write a fairly interesting book. Okay, jealousy aside, the more I got into the book the more I began to respect Tim Geithner, Hank Paulson, Ben Bernanke and Don Kohn. These four people were not only the principal architects of measures used to combat the incredible collapse of many of the 'shadow banks' like Lehman Brothers and AIG but also the decisive forces behind the recapitalization of so many financial institutions which might have otherwise failed. The four often effectively functioned as a team and the mutual respect they had for each other was clearly apparent. Their almost Herculean efforts to stop the bleeding and repair the damage were amazing. (Sometimes their efforts reminded me more of Sisyphus than Hercules though.) The story of just how bad it was has not been fully told. This book goes far to remedy that.

At core, Tim Geithner was the 'man with a plan' or perhaps better said the man who was willing to take action. To these ends, he would be the first to acknowledge that he had an incredible amount of help from many very able and dedicated men and women at both the New York Fed and in the Treasury Department. Geithner's story is also one of a pragmatist and a moral relativist. (Ah, think situational ethics.) He decided early on that restoring some order to the financial system and stemming the bleeding was a much more urgent priority than was crucifying the ignoramuses who headed the failing banks and ‘shadow banks.’ Geithner, who by his own admission was sometimes barely articulate when giving speeches, was hardly a friend of the banks. In fact, on more than one occasion his meetings with CEOs left him almost dumbfounded when he found out how naive they were as far as what was actually going on in their own institutions. Geithner, I think correctly, observes that money and bankers will always be like water trying to find its way around rocks. And, 'bankers' will always come up with innovative ways to circumvent rules. Thus, financial reform and the need for regulation and scrutiny of banks is a "forever war." The financial industry will always lobby Congress for relief from regulation. Quite frankly, after reading this I think the term "sense of entitlement" probably applies to the financial industry as much or more than any other segment of our economy and society.

Another thing that comes across poignantly is Geithner's willingness to take the blame when things did not go well. He virtually excoriates himself for some of the mistakes he made. He does that in painful detail. I suspect that this is, in part at least, the influence of his wife Carole, who urged him to be totally forthcoming. Geithner notes that she ‘read every word’ he wrote and critiqued every chapter.

Another thing that struck me was Geithner's recounting of testifying before Congress. (He did that many times.) Both the fringe right (Tea Party) types and fringe left (populist ‘progressives’) were much too interested in trying to punish CEOs and bonus takers and/or wanting to protect those "shadow banks" and more in their own constituencies. In perhaps the worst case, Eric Cantor (in Geithner's view) tried to manipulate negotiations in ways that might improve his (Cantor's) chances to gain the Speakership. The disgust in Geithner's tone when he discusses some of these people very much reminded me of Robert Gates' tone when the latter vented about the dysfunctional nature of our Congress in his memoir, “Duty.”

So, where does all this leave me? Well, for starters it leaves me with a great deal of respect and admiration for Geithner and his team. Secondly, it leads me to think that there has been a lot printed about the Great Recession, Bear Stearns, Lehman Brothers, Citi, and BoA, but not much of what has been printed recounts what transpired as well as thus memoir does. Finally, it is worth noting that the Epilogue, "Reflections on Financial Crises," is a superb assessment of lessons learned and a blueprint for what might be done in the future. I think this book ought to be mandatory reading for every member of Congress. But, even that is problematic because I think only about a third of them might begin to understand it.

Finally, it is worth noting that Geithner has a wonderful sense of humor which is definitely akin to the “gallows” humor that sustained those of us who were in Vietnam. Will leave you with this quotation which might give you a sense of the book and the man:

“Politics is not my life’s work, but it left me with some scars, and I have some things to say about the soul-crushing pathologies of Washington. I witnessed some appalling behavior in the political arena—selfishness and grandstanding, shameless hypocrisy and mindless partisanship. At times, the failures of our political system imposed tragic constraints on our ability to make the crisis less damaging and the recovery stronger. And yet, at the moments of most extreme peril, the system worked.”

[Braden · Rating 4 out of 5]

I’ve never found economics or finance interesting, and as a result know embarrassingly little about either subject. But this was a remarkable book written from a very unique perspective. Definitely recommend to anyone interested in learning more about the crisis of ‘08, and why the man most blamed for bailing out wall street stands behind those decisions so firmly. This is an important memoir, and I learned a ton.

[Justin Tapp · Rating 3 out of 5]

Stress Test: Reflections on Financial Crises
Here's what you'll not find in this book: The personal philosophies, principles, and policies Geithner used to run a major cabinet agency and the New York Federal Reserve prior to that. There is very little about the advice he gleaned from others, although Robert Rubin and Larry Summers were strong influences and possibly mentors. His economics is pretty rudimentary, mainly just referring to simple Keynesian policies in the book.

The strength of the book is the timeline of the financial crisis from the view of the NY Fed and Treasury. I have read multiple books and seen multiple documentaries of the financial crisis and I'm sure experts will one day compare the books and their sequences of the events and find contradictions, but I felt Geithner's take was pretty thorough and captured the stress on policymakers quite well. The Fed's stress test implemented, with the backing of Treasury, ended up being enormously important in shoring up confidence in U.S. banks among investors but received little press at the time due to other events. That was one policy triumph that Geithner feels was underrated.
He details the frustrations of TARP, how difficult it was to walk the center line when being attacked by the right and left. He has little positive to say about the Republican party and their response to the crisis, although Boehner comes across in the end as a sensible moderate hemmed in by the Tea Party.

I found Geithner's childhood interesting as he grew up as child of USAID worker in SE Asia. He developed a broad world view and studied in China, and later leveraged that experience to land a job in the international wing of the U.S. Treasury Department and later the IMF. This gave him invaluable working experience in the Asian financial crisis, as well as the Mexican peso crisis. It also allowed him to forge some understanding between himself and President Obama that appealed to the President-elect when selecting Geithner for Treasury.

Geithner opens the book essentially with an apology for his horrible confirmation testimony during Congressional hearings and his horrible roll-out of his plan to stress-test the banks. Behind the scenes, he tells of staffers working late nights on speech drafts, but he seems oddly detached and uninvolved in this process. There is very little info on how he managed his staff. Geithner felt a "crushing guilt" for making the President look bad and embarrassing his family. His wife is apparently a counselor and loathed Geithner's political role and the long hours he spent away from home. She opposed him accepting the nomination as Treasury Secretary, and President Obama had to personally assuage her doubts when he decided to keep him on after re-election.

In about 70% of the book, Geithner comes across as a partisan hack, simply supporting the position of the Obama administration and not lending many insights to the infighting among his economic team. He has nothing but praise for Obama from start to finish, which I find oddly contrasting to other memoirs I read where they at least find some fault in their former boss. He is often awkwardly included in Obama press conferences held for political purposes-- to denounce bonuses to CEOs, for example-- just to stand there and be seen as a silent supporter. I think he regrets those moments, but saw them as part of his job as a political appointee.

He expresses his frustration and bewilderment at watching Europe implode at the time the U.S. was finally starting to emerge from recession. Memorable one-liners from Sarkozy highlight his dealings with European leaders.

He was very supportive of Dodd-Frank and details the political perils of passing it when the Left started overreaching. He was also broadly supportive of Elizabeth Warren and defends himself and others in the Clinton White House for their fight against Brooksley Born's crusade for more derivatives regulation (she was right on principle, but wrong on proper policy execution). Time and again, he has to explain to others that he did not come from the financial industry. He personally had a "dim" view of finance, or at least his ability to work in the Wall Street environment. He was influenced by Michael Lewis' Liar's Poker.

Besides Lewis, Geithner also cites Nate Silver's The Signal and the Noise, Liaquat Ahmet's Lords of Finance, and Rogoff and Reinhart's This Time is Different. The few books he mentions are about the only insight into what he was thinking or learning, which does not appear to be deep. He includes some some general thoughts on financial regulation and dealing with a financial crisis.

I give this book 3.5 stars out of 5. A must-read on the financial crisis and period of '07-12.

[Oliver · Rating 4 out of 5]

I read this immediately after finishing Obama's memoir and I was struck by how similar they are in structure and perspective. The most engaging parts of both books are the journeys to high office - the lucky breaks, important contacts and, perhaps most critically, the spousal acquiescence, that allowed them to build careers at the top of the American system. Both men were raised in families devoted to international development and heavily exposed to other cultures as children, giving them a fervent but arguably rather idealised belief in both the power and uniqueness of American liberal values on the global stage. Both men have a clear and penetrating vision of how America could and should work, but it is not one shared by most Americans.

Once Geithner arrives at the Fed, the narrative settles into a week-by-week account of the build-up to and aftermath of the 2008 financial crisis. A lot of the details are quite challenging to follow without a background in finance, but he is careful to summarise the key takeaways and lessons for future crisis managers to identify when a systemic crisis is occurring, and what emergency powers governments need to manage markets and prevent panic. These parts are strongly argued - Geithner makes it clear that governments must act early and do whatever it takes to buy back confidence in the economy. He dismisses other concerns, including the risk of moral hazard and the desire for what he calls "old testament justice" against those whose greed contributed to the crisis, as not just distractions but actually counterproductive. Ultimately, he argues market sentiment must be the final arbiter of the right course of action in a financial crisis since it is only the market that restore growth to the economy and save society from the horrors of mass unemployment.

Like Obama, Geithner argues that the biggest mistake made by the Obama administration was its bungled communications strategy - leaving much of the American public unaware of how bad things had been or what had been done to save the country from a catastrophic depression. Looking back now, in 2021, it's hard not to feel that this failure was much deeper. Like Obama, Geithner had a technocratic style which largely failed to address the bigger structural (and political) problems in the United States. After the worst of the financial crisis had passed, Geithner presented reforms narrowly within the limits of what he thought was possible to get through the thicket of financial regulatory agencies and Congress. In the short-term these may have prevented a further financial crisis of the kind described in the book, but they did not offer a meaningful answer or alternative to an economic and political system increasingly wracked by longer-term crises.

[Arjun Narayan · Rating 2 out of 5]

This book can be summed up in one word: whiny.

I gave up about 15% of the way in. I skimmed the last few chapters, but there was nothing there of note. Geithner does not have the cojones to even give some sort of speculative analysis. That is a pity. I would have hoped he would have some insights to show, but he does not.

I learned almost nothing about the financial crisis that I had not already understood from various other books (Even Andrew Ross Sorkin's celebrity-rag style tell-all is chock full of information, which I tried my best to falsify and was impressed that it stood up to fact-checking scrutiny). Instead, all I got was hindsight laden rationalization of Geithner's actions. I guess I'm just not the target market for this book. Look, I get it. I get why the administration did what it had to. I get that the various agencies, Treasury in particular, had very limited agency and had to act quickly. They were constrained all around them - constrained by the most brain dead Congress in fifty years, constrained by having to deal with a monumental election cycle, constrained by the very thick fog of war, constrained by limits on their own agency. It is my understanding that many of their actions were well past the "questionably legal", and this is coming from someone who is well on their side, and thinks their actions were indeed necessary!

So I guess I didn't need to read a book telling me this in painstaking whine after whine. Consider me already sold on the thesis. But I am disappointed that there is literally nothing more in this book apart from the world's most tedious apologia.

[Ian Gillies · Rating 4 out of 5]

The Great Financial Crisis, from 2007 through 2009, starkly illuminated the structural and moral weaknesses of the capitalist system of the time. Among the structural weaknesses: the financialization of the western industrial economy as it shifted from manufacturing to financial services, wildly inaccurate conventional wisdom about regulation and risk, income disparities and unequal capacity to weather financial shocks, and the inadequacy of public institutions of the day to deal with systemic risk. Among the moral issues: tolerance of the economic disparities that rendered middle class families unable to counter falling asset values, the growing political resistance to government intervention and economic regulation of any kind, and the vacillation between “Old Testament” morality and technocratic pragmatism.

From 2007 to 2009 the Dow Jones index fell by 54%, from a peak of 14,164 to 6,547. About 11 million U.S. mortgages went underwater, meaning the value of the mortgage exceeded the value of the asset. That was about 22% of all mortgaged homes. The unemployment rate rose from 4.4% to 10%; at it’s peak 15.3 million Americans were unemployed. Enormous financial institutions like Lehman’s, Wamu and Country Wide were bankrupt, posing significant systemic risk to many other counterparties. Banks and near banks like Merrill Lynch, Bear Stearns, Bank of America, Citigroup, Wachovia and Fannie and Freddie Mae teetered on the edge of insolvency. Giant insurance firms like AIG, with policy holders around the world, faced insolvency. Several countries, including Portugal, Italy, Ireland, Greece and Spain (the PIIGS) appeared close to defaulting on their sovereign debt.

Into this economic chaos, enter Timothy Geithner, a kind of wonder boy heading the New York Fed and President Barack Obama’s choice for Treasury Secretary. Geithner was a member of the technocratic pragmatist school who claims to have not really wanted the job, believing that others were more experienced and qualified to be appointed. But when POTUS asks, apparently it is hard to resist.

Clinton and George W. Bush had been busy chipping away at the banking regulatory system in the late 1990s and early 2000s. Bush inherited a budget surplus of $128 billion from Clinton but proceeded to run up a gargantuan $1.4 trillion deficit through spending at the Iraq war and tax reductions.

The early 2000s was party time in the financial world. There were weird and wonderful financial instruments like Collateralized Debt Obligations (CDOs) and Mortgage Default Swaps used to facilitate lending on an assumption of continual increases in underlying asset values. A large portion of these financial shenanigans took place outside the world of financial regulation, in the investment banks, mortgage lenders and insurance companies. House prices in America were rising rapidly; “when the music is playing, you have to dance.” The FOMO emotion was driving activity. In the mortgage market brokers joked about “liar loans” (fictions about the borrower’s income) and NINJA mortgages (No income, No Job, No Assets). This was no laughing matter when the real estate bubble burst. After the November election in 2008, the Republican Bush left the Democrat Obama with American history’s biggest and dirtiest poopy diaper.

For a book delving into matters of the “dismal science” of economics, the story is compelling and well written, painting a picture of financial events and personalities that brings the reader into the room. Geithner seems to be an honest and, at times, a humble chronicler the way matters unfolded. He confesses the mistakes he personally made and describes the lessons to be drawn. He expresses regrets, not only for his fumbles but also for the inadequacy of the institutional machinery to cope with the crisis and the economic pain experienced by the homeowning middle class. He often refers to his regret about the time away from his family, commuting to his job, sleeping in his office during several of the most desperate episodes, and the amount of travel to international economic meetings. He comes across as intelligent, but not brilliant, diligent, disciplined, a good communicator and team leader and above all, trustworthy.

Financial markets, like money, depend on trust; a belief that the rules of the games are stable and known and that there is enough transparency and dependable data to make informed decisions that lead, more often than not, to positive outcomes. One of the key issues driving the GFC is the opacity of large parts of the financial system and ignorance about the vulnerabilities posed by the sophisticated financial instruments used to facilitate lending and manage mortgage risk. After the dust settled, some leaders at the top of the financial food chain confessed that they did not completely understand the inherent risks of practices in their business. If the people in charge don’t understand their business practices, how are the users of those instruments like mortgage brokers and mortgage holders going to understand them?

The core risk in a financial crisis is a “run on the bank”. Depositors consumed by fear rush to withdraw their money before there is none to withdraw. Similarly, lenders fear their terms will not be honoured and they will not recover their loans. Banks have no deposits to lend, and the credit market begins to seize up. In a general atmosphere of chaos and fear, trust vanishes. Which firms are teetering on the edge of insolvency? How far will share values fall? When long respected firms like Lehman’s fail, the fear and mistrust is validated. The cure for this doom loop is to establish a clear, authoritative and believable picture of the financial realities. That is what the “stress test” did. Geithner’s team at Treasury selected 19 of the most critical financial institution, constituting the bulk of the U.S. financial, system and subjected them to rigorous testing of their financial resiliency. The results of the tests were made public for inspection and commentary. The finding of the tests was that 10 of the 19 firms required injection of capital to withstand plausible economic shocks. Some of this capital, $70 billion, was injected by the federal government. The majority came from the private market. Once the facts were known and the government’s show of force was evident, the financial system began to function again.

The stress test itself was a form of risk taking. When the process began, the outcome was far from certain. What if the test revealed that all 19 firms were on the brink of bankruptcy? What if the 10 firms that needed capital were unable to get it because a recalcitrant congress would not provide the authority? Give credit to Geithner and the Treasury team for having the intelligence and courage to proceed.

There were several take aways for me. First, fiscal management at the senior government level is much different than at the household or personal level, a fact that confounds politicians of all stripes. The “moral hazard” of propping up financial firms whose leaders made disastrous judgements which threatened not only their firms, but the entire financial infrastructure, would seem to be clear cut. But when risk becomes systemic, policy makers may find it necessary to hold their nose and do the propping up. Systemic risk poses the risk of a line of dominos. When the first one falls, panic sets in, adding fuels to the fire. “Old Testament” justice would let poorly managed firms fail and would force shareholders and bond holders to “take a haircut” which triggers “sell” emotions in a market where there are no buyers. Punishing those who caused the fire seems like the right thing to do but, at the height of the collapse, it was the wrong thing to do because it stirred up fear which could easily lead to panic. Lehman’s bankruptcy came close to bringing down other pillars of the financial edifice. Many in the Old Testament school railed against bailouts and forced mergers warning it would lead to profligate behavior down the road. Those in the pragmatic school warned that failure to address systemic risk posed by some of the major players about to go under would lead to the collapse of the entire financial edifice with dire long-term consequences. They countered the moral hazard warnings with statements like “The fact that people smoke in bed is not a good reason not to have fire departments.”

Second, the United States at the time the GFC began did not have a full toolbox of policy tools to manage the crisis. Innovation in financial instruments outpaces the evolution of public institutions. One is driven by animal spirits and smart people. The other is based on reason, political negotiation – and some smart people. That is probably a dependable way to view regulation. Much of the risk that built up in the financial system resided in areas that were outside the normal regulatory apparatus. Not only were the tools nonexistent or inadequate to the task, but the size and nature of the risk was not well understood. Many smart people managing huge financial companies did not understand the risks inherent in the products they were selling. They certainly discounted the impact of a significant decrease in asset values. When the match fell into the dry tinder, it turned out that the fire trucks were not equipped with hoses. New programs developed on the fly had to be steered through a congress that, for its part, could not understand the dynamics of the crisis.

Geithner references the Powell Doctrine of military strategy, especially the piece about bringing overwhelming military force to the fight once you have established clear objectives and developed broad public support. The book makes it clear that application of this strategy was almost impossible in the U.S. system of governance. In 2008 and 2009 it was difficult in the extreme to bring the political forces together dampen the fear. And it was equally difficult to get the regulatory authority to apply the financial resources available. In the end, it was a miracle that the GFC in the U.S. was not more catastrophic and longed lived. Major banks like Bank of America or Citibank could have gone under. At that point, the panic would have been unstoppable.

The third takeaway is the pigheadedness and duplicity of many Republican politicians of the day. In 2008 the Republicans lost the white house and were minorities in the House and the Senate, though they had power in the Senate using the filibuster. Bush left Obama with an enormous deficit and financial chaos, but from day one Republicans blamed every bad economic metric on Obama and used their residual power in the Senate to block Obama’s attempts to address the flailing financial system. The early 2000s was the era of tea party Republicans who were anti government, anti regulation and anti tax at every turn. Geithner, who no one would describe as a progressive Democrat, came away from his job in 2012 with a jaundiced view of Republican politics. It was not their finest hour, and it has got much worse in the succeeding years.

In the end, many parts of the burning bridge were in fact salvaged. GM and Chrysler were saved from bankruptcy. Various shotgun wedding mergers prevented a number of major bankruptcies, and a various government mortgage programs reduced the number of residential mortgage defaults by a few million. But millions of families lost their homes. The U.S. emerged from the crisis earlier than many other countries even though the cancer started there. Geithner and his team were at the institutional center for developing the policies and programs for doing this. Congress provided just enough authority to put out the fire but not before it had wreaked havoc across the world. Winston Churchill was rumored to have said something like “You can always count on the Americans to do the right thing – after they have tried everything else.” That’s a pretty good summary of the story contained in Stress Test.

[Emily · Rating 4 out of 5]

Regardless of whether or not you agree with Geithner's decisions, this was an interesting telling of the events before, during and after the "meltdown". He defends some of his choices, while with others he admits fault. For a book about finance - a relatively LONG book about finance - it was quite engaging.

[Rick Wilson · Rating 4 out of 5]

This book is fantastic. Heart of Darkness but for the 2007-2009 financial crisis.

Thoroughly humanizes the human punching bag of the financial crisis, Timothy Geithner. Whether you agree of disagree with what was done. This book gives a excellent view of what it was like inside the Fed and treasury during those years.

[Ken Watari · Rating 4 out of 5]

Quick summary:

-Interesting portrait of a man who became a financial crisis expert almost by chance, but became portrayed by the media as a crony of Wall Street (he had never worked for a bank)… although he now co-runs PE firm Warburg Pincus

-A man who was well suited for the role because of his disposition to be constantly thinking about what could go wrong

-He did not have a strong economics background (Dartmouth undergrad and SAIS masters only), but he advanced because: (1) he got his foot in the door as a Asia specialist, and (2) he worked with some incredible mentors – Larry Summers and Robert Rubin

-Geithner’s central thesis on financial crises seems to be something like – need the government to step in aggressively and predictably to rebuild confidence in the financial system. It’s all about preventing bank runs. The public tends to get too “Old Testament” like in terms of wanting to dish out punishments to banks and wanting to avoid moral hazard. But, what they often under-estimate is how badly a bank failure could be for ordinary people

-Some implications from Geithner’s central thesis:
(1) There are of course prevention steps that the government can be taking during good times – e.g., pass regulations to require higher levels of capital buffer – to reduce the frequency and the severity of financial crises, but that financial crises are still likely to happen
(2) Because financial crises are still likely to happen, the government, and the executive branch in particular, needs to have the ability to take the extreme steps necessary (like war-time powers)

- Causes of financial crises: Maybe I am over-simplifying but seems to happen because folks are over-optimistic and take on too much debt that they aren’t able to repay. This was true for Thailand, Indonesia, and South Korea when they took on a lot of debt to make investments that didn’t pay off. And, this was true for the US financial crisis with the US housing market, which did not keep rising across the board

- For European financial crisis: Geithner felt the Europeans were not aggressive enough in responding and that the EU, and the Germans in particular, were too Old Testament, imposing austerity measures that were too strict on Greece, etc. This did not help with the recovery of the European economy

[John Frech · Rating 5 out of 5]

First, I am a former Federal Banking regulator who helped clean up the S&L crisis and a couple other issues in the 1980s and 1990s. So, I was delighted to have a chance to listen to Mr. Geithner's take on the financial crisis of 2007-2012.
Second, I heard Ky Rysdall interview Mr. Geithner on Marketplace before I read the book and I was very impressed with Mr. Geithner's recollections of his roles in 2007-2013, and his concerns about the current state of the financial ecosystem. After I heard the interview, I immediately checked the book out of the library and started reading.
I was very impressed with this book. It is a detailed memoir about the events leading up to the great Recession and the repairs to the financial system that were attempted in President Obama's first term. Mr. Geithner does a fantastic job of setting the background and the players as he tells the story about collossal failures of Bear Sterns, WaMU, AIG and Lehman Brothers - just to name a few. He also tackles the policy issues that evolved from these events. And, he is very clear about how close the world came to an economic and financial meltdown during those years.
I must admit that I had an easier time reading his memoir because I was very familiar with the financial issues that very nearly led to the collapse of the international financial system. Those readers that are not as familiar with financial derivatives, risk management and other banking terms may have a tougher go at this. Mr. Geithner does provide a glossary of terms. However, it is one thing to say that one can study Finance, it is another to say one has experience with Finance. I also came to understand another factor that fueled the Tea Party movement, which gave rise to President 45.
Mr. Geithner ends the book with some lessons learned and prescriptions for dealing with the next financial crisis. I do hope that financial leaders will take a moment to read at least the last 2 chaptes of this book before the next crisis comes. As for the rest of us, read this book!

[Tim Blackburn · Rating 3 out of 5]

I admire the work that Mr Geithner and his team did that prevented the U.S. from entering a depression during the financial crisis of 2008-09. This book details the programs that saved us from the precipice of disaster. The author explained the programs in layman terms that were very understandable. The political posturing described is both fascinating and disappointing at the same time. The reason that I only gave 3 stars was the author's repeated use of the term "Old Testament" justice when describing the public and political pressure to allow guilty banking entities to fail. The first 2 or 3 times the author used the term were forgivable but using the term 18 times in the book clearly displayed the author's utter disregard and contempt for both Judaism and Christianity, implying that from his vast intellectual throne, the Bible is a frivolous document. I find it completely unfathomable that an author as obviously intelligent as Mr Geithner, couldn't find another adjective to use instead of repeating 18 times this offensive term. Very disappointing.

[Pknapp · Rating 5 out of 5]

Exceptionally well-written, clear, and gripping account of Geithner's experience helping the country avoid another Great Depression in 2008. Made me glad we had someone like Geithner in charge through the crisis, and also worried about who in our newly vandalized financial bureaucracy would be able to handle such a crisis now.
It's striking to read of the steady, relentless tsunami of criticism Geithner endured. The media and the public lambasted him for being a shill for Wall Street, while the banks denounced him for going too far. In such a climate it's amazing any decent person still goes into public service.

[Ray · Rating 4 out of 5]

Not a finance bro, so tbh I understood like maybe 50% of the finanicak topics at best. But the core concepts were well written. Bro lowkey comes off as a know it all and everyone else is wrong kind of guy, but tbh Ill (yes me of all people) cut him some slack cuz thats prly what it takes to lead the charge against recovering the economy. Very interesting guy - book is written from his perspective so maybe hes glazing himself and his ideas too much, but from what i can tell he deserves the right to self glaze himself.

Finance topics aside, I think the books discusses politics inside washington and general policy making very well and the importance of taking action🤓

[Carl · Rating 3 out of 5]

Geithner has what seems like an unusual background, neither academia nor high finance, he's mostly been a public servant with a strong exposure to public & international monetary & fiscal policy. He claims no political party affiliation, he's a registered independent but says he grew up with definite Republican leanings & has since developed a sympathy for the Democratic worldview. What he does claim to be tho, without hedging his bet, it a pragmatist whose core motto is "any plan beats no plan". He gained the attention of the right people & made a strong positive impression on most of them & largely with that impetus, found himself as head of the NY Fed & later Secretary of the Treasury under Obama in critically important positions during our recent Wall St. centered financial collapse. This book for the most part is a detailed recounting of Geithner's role, the other important players, the problems & crises encountered & the strategies employed to avoid the 2nd Great Recession & to alleviate & then repair the damage to our national economy. While much of the detail might be considered tedious - seemingly a never ending series of crises & sources of impending doom - there are areas of great interest. First off, Geithner makes his case of why he was the right guy in the right place. In his view, only a committed pragmatist could have pulled it off. The popular nostrums of the left & the right wouldn't have worked & would have been counter productive. Thus, the bailouts, the absence of prosecutions, and the emphasis on bailing out the fat cats. In a credit crisis, faith in the system must be maintained. He makes a good case for himself & the approach employed & makes one question one's progressive beliefs as one might suppose a conservative might question theirs - if they ever engage in reflexive doubt. Also interesting is Geithner's portrayal of the personalities and issues. In many ways, he helps us to understand what it might have been like to serve in the top eschelons of The Fed or Treasury & to deal with the Lloyd Blankfeins, the Jamie Dimons, the Larry Summers, Hank Paulsons, Paul Volckers, & Barack Obama himself. Most of them get passing grades, some much better, some much worse. Finally, he has interesting things to say about the political process & most of that, especially the aspects relating to the opposition Republican Party - whose watch & policies ushered in the fiasco - are disheartening to put it mildly.

I felt the need to see what someone - my choice was Paul Krugman whose views & analyses I generally value - had to say about Geithner's book & performance. Krugman concedes that Geithner was effective in limiting the damage but he faults his policies for their failure to extend support to the little guy, the guy whose home was foreclosed, while protecting the interests of the oligarchs. We were spared a depression but doomed to a slow & incomplete recovery which is what we are still experiencing. Krugman labels the book an exercise in self congratulation on Geithner's part & I would concur.

[Mike · Rating 3 out of 5]

Didn't expect the book to be as political as it was and I was hoping for more of just an insider perspective on the crisis. I did get that which was enjoyable but it felt like a lot of chaff to get through. It did give me more respect for Geithner although it felt like he could have left out some of the name dropping and negativity that was added in gratuitously.

[Annelise · Rating 4 out of 5]

Re-read. Read for the first time when I started at UST, read again now at the outset of another phase of my professional life. Say haircuts again.

[Michael Pugh · Rating 4 out of 5]

Scratches the itch of the fascination of the financial crisis. Interesting to hear the perspective of a technocrat in charge at a time of crippling polarization.

[Hendry Waldo Chendrawan · Rating 4 out of 5]

This book is aimed to correct the perception in public about policies taken during 2008 crisis. And I’m convinced.

Listening to audio version and this is the one among few I didn’t set the listening speed faster.