In New York, Geithner Kicks Off Financial-Reform Sales Tour

Treasury Secretary Timothy Geithner at New York University's Stern School of Business, Aug. 2. Mario Tama / Getty Images

Treasury officials are fanning out across the country this week to cities known for their financial institutions, including Boston, Philadelphia, and Charlotte, N.C., to sell financial reform to Americans.

First stop: New York, where Treasury Secretary Timothy Geithner gave a speech Monday afternoon at NYU's Stern School of Business. There, before a small audience, he laid out the moral argument for financial reform and urged bankers to act before the government forced them to curb their excesses. "You can do all of that right now, even before the first new rule of financial reform is written," he said. After charting out the causes of the Great Recession, Geithner went through the four pillars of financial reform: consumer protection, mortgage lending, the derivatives market, and increased leverage for global financial institutions.

Though his speech gave a more detailed look at the Obama administration’s plans, the crux of his talk centered on the ethical argument that banks need to keep more capital on hand and regulate themselves—just as consumers need to do a better job of saving—all for the good of the country. Both the tone of the speech and the Treasury officials’ roster of appearances were reminiscent of the way President Obama’s people marketed health-care legislation and the stimulus package.

In early February 2009, Obama went to the heart of communities hit by the Great Recession—Elkhart, Ind.; Ft. Myers, Fla.; and Peoria, Ill.—to talk up the need for a stimulus package, just as Geithner came to the heart of the banking industry in Manhattan on Monday. A large segment of Geithner’s talk centered on the ways financial reform will help consumers. He talked specifically about simpler disclosures for auto loans, credit cards, and mortgages, as well as better enforcement of consumer-finance and mortgage scams, much like the Obama administration's efforts to try to explain health-care reform to the public by talking about the ways it would help ordinary Americans. The administration recently spent $700,000 on national cable-TV ads, for instance, in which Andy Griffith said health-care reform will give seniors free checkups and lower prescription costs.

But, moral arguments notwithstanding, the administration still needs to sell financial reform to bankers and financial leaders—if not in public, then at least behind closed doors. Geithner met Mayor Michael Bloomberg for breakfast Monday and privately ate lunch with leaders from the city’s financial and real-estate sectors. According to Reuters, the lunch list included Laurence Fink of BlackRock, Donald Marron of Lightyear Capital, Eric Mindich of Eton Park Capital Management, and James Tisch of Loews Corp.