Today on NPR's All Things Considered Tim Geithner, former Treasury secretary, while shilling his new book, Stress Test, made an analogy to his handling of the bank bailout:
It's like you're in the cockpit of the plane — your engine's burning, smoke's filling the cabin, it's filled with a bunch of people that are fighting with each other about who's responsible, you have terrorists on the plane and people want you to come out of the cockpit and put them in jail. And you have to land the plane. That terrifying core objective in a crisis is to make sure you first put out the fire.
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Was bailing out the TBTF banks like landing a burning plane? Or was he putting out a fire on the plane? Which was it? Let's suppose it's both.
In other words, did the government essentially have to give the TBTF banks all the money they wanted, no strings attached, or the entire nation would have gone down in burning flame?
Well, no. Here's why. When you land a plane to protect its passengers, you don't actually supply the terrorists–apparently he is referring to the TBTF banks, a good analogy actually--more ammunition and fuel and tell them to go take some other planes. You don't spend a good deal of time negotiating how and where you are going to land with them. And if you are going to negotiate with the terrorists, you don't get nothing in return. You don't give them the very equipment to bomb the plane you just saved once it lands. You don't let them take the wheel. Lastly, you don't give them immunity after you safely land the plane–if indeed you really did.
Geithner failed the stress test. But it is we who will suffer the repercussions of it for many years to come.