But Obama pressed him to stay. On a hot August afternoon, Geithner was driven back to his unassuming split-level residence in Bethesda and helped his son load up a Penske truck with some of his family’s belongings — leaving enough furniture so that he alone could remain in Washington. He got behind the wheel and drove up I-95 to Larchmont, the Secret Service trailing behind.
Pressure on Europe
One of the top reasons that Obama asked Geithner to stay was his experience with foreign financial crises, according to administration officials, at a time Europe’s problems were threatening to derail the U.S. recovery.
Geithner consistently pushed for an approach in Europe that mimicked the U.S. response in 2008 and 2009 — a large government-backed firewall — and tried to infuse his advocacy with humility, acknowledging that the world’s financial problems had started in the United States.
But the Europeans at first did not appreciate his advice, according to Lagarde.
“His role was often resented by the Europeans who thought that he was interfering too much,” she said. But she added that his entreaties grew more persuasive over time, as Geithner adopted a softer approach, and he had better results convincing the Europeans to take the steps necessary to stabilize their financial system.
“His style evolved over time,” she said. “He’s smart enough to understand where not to push too far and where to stop and how to sort of mitigate a little bit his impatience.”
At home, Geithner turned his attention to the housing market, which was a major drag on the economy. Millions of homeowners underwater on their properties remained a blight on the administration’s record. Many critics used the inability to right the housing market as a prime example of how the government bailed out banks but not everyday Americans.
Geithner said he understands the frustration, given that he helped push “powerful things” to rescue the financial system. In housing, he said, the administration had far more limited authority and faced a more intractable problem. Overall, he said, he feels “very comfortable with the broad choices we made.”
But he said he did change his mind about at least one policy affecting the housing market. He was originally skeptical about the value of taxpayer-subsidized principal reductions for underwater borrowers. And while he never agreed with people who called for a massive taxpayer-subsidized plan to forgive mortgage debt, his evolving understanding of the housing crisis as it unfolded convinced him that a more limited program was warranted.
“Early on I thought that it was just more efficient and more quick and more powerful to give the relief in the form of payment relief,” he said. “If you could complement that program with targeted principal reduction [for those] deeply underwater, you could have better outcomes.”
In the last chapter of his service on Obama’s team, Geithner was tapped to lead negotiations on Capitol Hill over the fiscal cliff — a notable transformation for a man who earned scorn in Congress early in his term.
Geithner said the administration has been successful in winning political support for many policies — including making progress on the debt. It has been less successful, he said, in pursuing additional stimulus to help the economy or in sealing a comprehensive deal to slow federal borrowing.
He leaves the challenge of finding a way to generate enough support for those proposals to his nominated successor, White House chief of staff Jack Lew.
“We’re still searching,” Geithner said.