Tim Geithner's "involvement" with the failed investment banks had to do with his responsibilities as President of the New York Fed. The New York Federal Reserve Bank is the only regional bank with a permanent vote on the Federal Open Market Committee and its president is traditionally selected as the Committee's vice chairman. The President of the New York Fed is generally considered as the most powerful of the Fed Bank CEO's and certainly the one with the most responsibility, given the bank's location in the "capital" of the U.S. financial system. One of his primary responsibilities is to serve as the Fed's "voice" to the New York financial community.

As president of the New York Fed -- one of 12 regional federal reserve banks that regulate banks and help set the nation's monetary policy -- Geithner has been the central bank's chief representative to Wall Street as it has disintegrated. In speeches during the years leading up to the current crisis, Geithner repeatedly raised concerns about frailties in the financial system -- pointing out, for example, weaknesses in the settlement and clearing systems by which financial transactions occur and the absence of regulatory oversight in the market for obscure financial products known as derivatives. In his role with the Fed, all he could do is speak out and recommend. It is the Congress which has primary responsibility for directing regulatory activities of the government.

I used to work with Geithner's predecessor at the New York Fed, Bill McDonough. Bill was a senior executive at The First National Bank of Chicago, the bank where I worked for 23 years. He was head of the New York Fed from 1993 until he retired and Geithner took over in 2003. While Geithner was involved with the financial crisis of 2008, McDonough was similarly involved in representing the Fed in the near failure of Long Term Capital Management (LTCM), the huge hedge fund that nearly brought down the U.S. banking system in 1998.

While the LTCM failure wuld have brought down the banking system, it was a miniscule problem compared to the current crisis. McDonough is generally credited with "saving" the system by pressuring the heads of the ten largest banks in the country to piut together a credit facility over the weekend before LTCM was going to decalre bankruptcy that would permit LTCM to continue to operate as it was liquidated. The current problem was simply too large for Geithner to have any chance at similar success this time around.

So while some press reports have said that Geithner was "involved" in the failure of the investment banks, the takeover of others and the government takeover of Fannie and Freddie, they really didn't go far enough to explain to the public that his involvement was as the government's representative to Wall Street. I've never seen it written, but my guess is that it was Geithner's weekend negotiations that resulted in the Bank of America taking over WaMu and JPMorgan Chase taking over Bear Stearns and later Merrill Lynch, narrowly avoiding their failure. I'm certain he was similarly involved with a major voice in recommending to the Secretary of the Treasury and the President that the government had to take over Fannie, Freddie and AIG. He's a lot more than a stuffy bank chairman. He's been on the front lines of the current crisis, experience which will help him do a better job on his watch as Treasury Secretary.