Geithner versus Bair

08/04/2009 • Economic Policy Journal

Friday's blow up by Treasury Secretary Geithner may have been directed to a large degree at FDIC Chairman Sheila Bair. She is against the Federal Reserve gaining more power, and Geithner and Bair have history. WSJ is running the below excerpt today from WSJ economics editor David Wessel's new book, In Fed We Trust. Note Geithner's forceful attempt to push Wachovia into the hands of Citi, which would have been a gift similar to the gifts of Bear Stearns and Washington Mutual delivered to JPMorgan Chase. It should be noted that former Goldman CEO, Robert Rubin, played an important roles at Citi, including for a short-term Chairman--which would explain the desire to help out Citi. Geithner really wanted to give Citi, Wachovia compared to the multi-billion bid from Wells Fargo. Keep in mind while you read the excerpt that the initial deal with Citi was for $1 per share of Wachovia stock, Wachovia ultimately accepted an offer to merge with Wells Fargo for $7 per share.