Geithner Ignored Obama Order to Dissolve Citigroup

U.S. Secretary of the Treasury Timothy Geithner, 02/11/11. (photo: Getty Images)

By Justin Sink, The Hill

16 September 11

Ron Suskind, author of two Bush-era exposés -- "The Price of Loyalty" and "The One Percent Doctrine," is back with another important look into the inner workings of the White House. This time he pulls back the curtain on Obama's economic team and policies. -- JPS/RSN

new book by Pulitzer Prize-winning author Ron Suskind reveals that Treasury Secretary Timothy Geithner ignored a direct order from President Obama for the reconstruction of major banks during the financial crisis.

The reports call into question the president's leadership and financial savvy at a time when the president is most vulnerable on those topics, with poll numbers on his handling of the economy hitting record lows.

According to reports Friday, Geithner ignored a March 2009 order that asked the Treasury Department to consider dissolving Citigroup, one of the nation's largest financial services companies. Citigroup was among the worst hit by the financial crisis in 2008, and needed billions in bailout money to stay afloat.

Many have criticized the Obama administration - and Geithner, the former president of the New York Federal Reserve, specifically - of being too focused on helping the banking industry after the recession. Critics on both the left and right argue that the government should not have bailed out banks that submarined the economy after issuing bad mortgages.

According to The Associated Press, Obama acknowledged the Citigroup incident in an interview with Suskind. Obama tried to downplay his reaction upon discovering that Geithner had ignored his request, saying, "Agitated may be too strong a word."

Obama went on to blame the slow-moving machinations of the federal government, saying, "the speed with which the bureaucracy could exercise my decision was slower than I wanted."

For his part, Geithner told Suskind that "I don't slow walk the president on anything."

Even if the two men involved try to minimize the fallout from the Citigroup incident, it - and other excerpts from the book - threaten Obama's narrative as he pushes for further economic reform and jobs programs. Already, a poll released by Gallup yesterday found that Americans believe Republicans are better suited than Democrats to deal with the economy and unemployment.

Larry Summers, Obama's former economic adviser, said that the economic team under Obama was poorly coordinated, and that the new president made mistakes that would not have happened under President Clinton. The book reveals that White House aide Pete Rouse observed "deep dissatisfaction within the economic team" and Summers' leadership.

Obama also acknowledged he was too focused on economic policy, and did a poor job of establishing a larger economic narrative that might have calmed fears and restored faith in the financial system.