Stress Test: Reflections on Financial Crises Paperback – May 5, 2015

The Great Recession and financial panic of 2007-2009 has a lot of myths and stories surrounding it concerning what the government did or didn't do, what it should've done and shouldn't have done, and the motives of those working behind the scenes. Former Secretary of the Treasury Timothy Geithner is one of those lighting rod figures from the crisis who, because of his relative anonymity prior to the crisis, is often misunderstood or caricatured. In this book, Sec. Geithner not only dispels the myths about his own background, but also provides a unique insight and perspective on the panic from one of the only two people in high government who was there from beginning to end (Fed chairman Ben Bernanke being the other one). But his story, and his experiences with financial panics, doesn't start in 2007, but rather starts with his upbringing in a family that was involved in international development and finances from when he was very young, always moving from one country to another and spending very little time in America. From there, it moves on to his time as a civil servant in the Treasury department's international wing, dealing with the crises brought on the by the Asian financial panics of the 1990s and eventual rising to be Assistant Secretary of the Treasury in charge of the international branch. From those times Mr. Geithner picks up a lot of invaluable experience in financial panics, what makes them better, and what makes them worse. From there he makes the surprising leap to head of the Federal Reserve Bank of New York, the most powerful of the regional Federal Reserve Boards in the country. And that is where the main story begins as Mr. Geithner describes the events that led to the panic, the actions he took as FRBNY chair and then Treasury Secretary, why they took them, and why they were necessary even if they were both unpopular and counterintuitive. The book reaches its climax with the stress tests backed by promises of capital injections for those banks the tests deemed were in need of them. Once the results of the test are released in the spring of 2009 a certain measure of calm enters the markets and the last chapters feel like a denouement as he deals with the Eurozone crisis and the toxic politics of Washington following the ascendancy of the Tea Party in 2010. What is surprising is how in the first half of the book Mr. Geithner seems to undersell himself, not out of a sense of humility, but because he genuinely seemed to believe that there were other people better or more knowledgeable than him. From my perspective, it seems like a no-brainer that Pres. Obama tapped him to be Treasury Secretary, even if he was a terrible salesman (a flaw that he readily, even jokingly, admits to being). What is also great about this book is how much value it has beyond being another account of the financial crisis. He does a great job of explaining why the unpopular decisions the Fed, the FDIC, and the Treasury took were necessary to save the economy, even if he falls into the trap of using too much of the jargon of Wall St. to explain it. I believe this book has value not only as an account of this financial crisis, but as a guide to how to handle future financial, indeed any, crisis in the future. As Mr. Geithner is fond of saying, a plan beats no plan. I highly recommend this book to anyone interested in the true story behind the financial crisis and the Great Recession of 2007-2009.

Generally, a book regarding the economics of the Great Recession would be a long boring read.Mr. Geithner has defied expectations however and his book is a good read, rather enjoyable in fact.He writes with a good sense of himself and is able to see his perceived flaws.Likewise he seems to enjoy making fun of some of his colleagues. Case in point, Larry Summers is portrayed as a self-engaged, self-loving, self-whatever.That said, Mr. Geithner is defensive regarding his role in protecting the banks and their "leaders" while the Great Recession ran its course. His general theme seems to be: we had to save the system, we didn't have time to deal with mere individuals, regardless of how stupid they were. Understandable while the system was being saved. But once the fire was out, why did we allow the stupid people who drove the economy into the ditch to continue leading BofA, Citi, etc. Granted, being stupid is not a crime. However one would hope that stupidity is not a requirement to be a leader of alarge multi-national bank. Mr. Geithner does not address the stupid issue and why stupid people were allowed tocontinue to lead the banking system long after their faults were exposed for all to see. Mr. Geithner and his friends, Ben and Larry and others had the ability to get rid of the stupid people - but they chose not to do so. I guess it's hard to say goodbye to friends.It's a good book but it does not answer that one question.

"Everyone's got a strategy until they get punched in the face."--MIKE TYSONFormer Secretary of the Treasury, Timothy Geithner, has finally written his version of the Great Recession in which he oversaw the $700 billion intervention for the financial services system. The former Secretary quotes Mike Tyson to shed light on his own predicament: Geithner had a strategy, but convincing Congress and an administration bent on punishing business changed the way he played the game. Geithner admits the experience left him with scars. He saw appalling behavior in the political arena--"selfish and grandstanding, shameless hypocrisy, and mindless partisanship."Stress Test is a fascinating behind-the-scenes history of the period as well as a warning sign of deeper fractures in our country's relations between business and politics. The overarching theme is based on a biblical conceit in which the average fellow--blindsided and gored by risk hungry bulls, and Geithner is clearly biased about who he feels deserves the blame - Wall Street, Republicans in Congress, and less conscientious regulators--is now demanding divine intervention and some brutal "Old Testament punishment."At its depth, $15 trillion in wealth disappeared from American's balance sheets, bringing pensions and the college and retirement funds of average Americans to an abrupt halt. Nearly 9 million workers lost jobs and an equal number slipped below the poverty level. Unemployment rose to 10 percent. Then the causes started to surface and we began hearing about these newfangled things called derivatives, CDS and CDS squared. Most Americans agreed with former Fed Chair Paul Volcker who quipped, "There hasn't been a useful financial innovation since the ATM."The turnaround that Geithner describes--in which the leading characters in addition to himself include President Barack Obama; two-term Fed Chair Ben Bernanke; economic advisor Larry Summers; and scores of Great Recession warriors--ultimately enabled the country to right itself and make a return on its investment, so that by the end of 2010 the government owned no more banks. Geithner's retelling of this tale is perfect bliss for those obsessed with America's story of the Great Recession.But even the most supportive reader has to ask why, as president of the New York Fed, even he was blindsided by the collapse of Lehman and the impact on other major investment banks over which he had jurisdiction? He writes candidly about the strange set of circumstances that led him to appoint Dick Fuld to the NY Fed board, and subsequently when everything went wrong, had to walk that back in a hurry. But how could a savvy regulator be caught unawares by the timing of the financial crisis given exhibit number one was a board director, and the Fed was indeed the official regulator of the other major banks? The banker's misdeeds, if business practices that were condoned and approved by regulators could be called that, should have been quite easily discovered by the annual audits the Fed conducts on all regulated firms. Instead, Geithner points at the shadow banking system that included Fannie Mae, Freddie Mac, unregulated mortgage originators, and firms that "behaved like banks without having to obey bank safety and soundness rules." The only plausible answer is that none of the bankers, nor anyone in power at the time, foresaw the housing crisis morph into the credit crisis and from there to the global financial meltdown. This is not to blame Geithner, in fact, he should be praised for his brilliant performance, but to observe that no one knew how devastating this was going to be.One regulator did have a hunch, however, and Geithner takes her on somewhat defensively. Brooksley Born, the feisty and outspoken chair of the Commodity Futures Trading Commission (CFTC), was the first to "float the idea of regulating privately traded derivatives." Geithner pauses here to give a pass to all the U.S. regulators who felt her proposal would "create dangerous legal uncertainties and ultimately financial chaos". It wasn't Born vs. the Old Boys Club, he asserts, before impaling the CFTC as unequal to the Fed, and a captive voice of Chicago trading culture. In the end, Geithner writes, Born "just didn't have a plausible plan." Ouch.In politics, what really matters is not what you did as what you do, which explains why George W. Bush and his Fed chair, Alan Greenspan, get short shrift, while Elizabeth Warren is treated royally.An entire chapter could be devoted to Larry Summers, whose brilliance Geithner underscores with a quote from Henry Kissinger: "All administrations should have a permanent office for Larry Summers."For political and economic history junkies, Stress Test is required, and even enjoyable reading. It is a story that hopefully no one will need to rewrite any time soon.

Sinta-se parte das decisões, consequências e o estresse vivido por quem estava na linha de frente na crise 2008. Leitura super recomendado para visualizar os motivos que antecederam a crise e as medidas tomadas e não tomadas para controlá-la. Além de conhecer a interessante bibliografia de Timothy Geithner.

Explicación muy practica de lo ocurrido en la crisis y como fueron actuando, desde una visión para todos los públicos

Awesome book about the financial crisis of 2008

A well written book about the Recession of 2007-2012. The book is very informative about making decisions without knowing fully the effects of the decisions being make in a highly flued situation. Well worth the time to read 500 pages

Compré el libro porque Warren Buffet lo puso en su lista de libros favoritos, excelentes historias de como lograron detener la economía americana de un desastre. El autor te pone en sus zapatos y te hace sentir una parte de lo que él vivió en aquella dura época.