WASHINGTON— As the fourth anniversary of the first government bailout of the financial crisis approached, Treasury Secretary Timothy F. Geithner on Friday decried financial crisis "amnesia" by opponents of the sweeping regulatory overhaul enacted to prevent a repeat.
"We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans," Geithner wrote in an opinion article in the Wall Street Journal. "Amnesia is what causes financial crises. These reforms are worth fighting to preserve."
Geithner offered a vigorous and personal defense of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which has been sharply criticized by the financial industry and Republicans as a severe regulatory overreaction that is hindering the economic recovery.
"My wife occasionally looks up from the newspaper with bewilderment while reading another story about people in the financial world or their lobbyists complaining about Wall Street reform or claiming they didn't need the Troubled Asset Relief Program," Geithner wrote. "She reminds me of the panicked calls she answered for me at home late at night or early in the morning in 2008 from the then-giants of our financial system."
He specifically talked of the call one night in early March 2008 from Alan Schwartz, chief executive of Bear Stearns, saying the investment bank planned to file for bankruptcy. Geithner was head of the Federal Reserve Bank of New York at the time.
Fearing a financial meltdown if Bear Stearns collapsed, the Fed provided $30 billion in emergency money to help JPMorgan Chase buy its former rival. The action began a series of extraordinary measures by the Fed in 2008 and 2009, including the creation of the $700 billion TARP bailout fund, to address the crisis.
Geithner argued that amnesia led to years of excessive risk-taking by Wall Street and a failure by regulators to have tools in place to deal with problems when they arose.
"There was no memory of extreme crisis, no memory of what can happen when a nation allows huge amounts of risk to build up outside of the safeguards all economies require," Geithner said. "The financial safeguards in the law at that moment were tragically antiquated and weak.
"Remember the crisis when you hear complaints about financial reform — complaints about limits on risk-taking or requirements for transparency and disclosure," he said. "Remember the crisis when you read about the hundreds of millions of dollars now being spent on lobbyists trying to weaken or repeal financial reform."