DaveNash3 reviewed Stress Test by Timothy F. Geithner
Review of 'Stress Test' on 'Storygraph'
3 stars
Oh, I wanted to like this book. Giethner comes off as a nice guy here like he did in the spotlight as New York Fed Head and Treasury Sec during the 2007 - 2009 financial debacle.
His inarticulateness was one of the reasons he gave to President Obama for not appointing him to head the Treasury. That inarticulateness is less of problem for a Treasury head then it is for an author. Writing in 2013 with time reflect, I expected more from a book endorsed by Doris Kearns Goodwin.
Despite that, when he gets down to the reasons for the crisis he gives the high level concerns of - liquidity, risk, and poor regulatory oversight. So does every other journalist who covered the crisis.
After reading The Big Short, I'm convinced that issues brought about by collateralize debt obligations and credit default swamps was the primary cause of the crisis. …
Oh, I wanted to like this book. Giethner comes off as a nice guy here like he did in the spotlight as New York Fed Head and Treasury Sec during the 2007 - 2009 financial debacle.
His inarticulateness was one of the reasons he gave to President Obama for not appointing him to head the Treasury. That inarticulateness is less of problem for a Treasury head then it is for an author. Writing in 2013 with time reflect, I expected more from a book endorsed by Doris Kearns Goodwin.
Despite that, when he gets down to the reasons for the crisis he gives the high level concerns of - liquidity, risk, and poor regulatory oversight. So does every other journalist who covered the crisis.
After reading The Big Short, I'm convinced that issues brought about by collateralize debt obligations and credit default swamps was the primary cause of the crisis.
Too much risk, liquidity and poor oversight were problems way before the meltdown. If those were the principle causes we'd just have dotcom crash or S&L debacle.
The banks couldn't mark the CDOs value correctly. The banks bought the highest tranches and marked them close to 100 cents on the dollar when in fact they were worth much less. They were always worth less because most of them were subprime floating rate mortgages and when the Fed hiked rates aggressively the rates reset after the teaser two year period and massive defaults followed. This should have been foreseen from the beginning. If anything the Fed exacerbated the crisis by raising rates. Only rising home prices kept the music playing, because subprime mortgagees weren't actually paying off their debt, they were refinancing based on a higher bs home value. This was basically giant ponzi scheme.
It doesn't matter what other controls or risk tolerance was in place, if the banks were totally off on their valuations of CDOs, they were screwed. And by extension we were all screwed. Giethner doesn't get into this level detail like Micheal Lewis does.
Geithner gvies a lot of platitudes, he means well. He does do a good job explaining that the government didn't let Lehman collapse and how Lehman was different from AIG and Bear.
Much like his dedicated service to our country, Giethner though he's well intentioned is in over his head.