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Tim Geithner is cashing in

Geithner will be president of Warburg Pincus. Is there anything wrong with that? It depends! (Chip Somodevilla/Bloomberg News)
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Tim Geithner, apparently now tanned and rested after a long six years of financial crisis, is going back to work. The former Treasury secretary and New York Fed chief will be president and managing director of Warburg Pincus, the private equity firm.

The brickbats are flying fast. Here are examples from Ryan Grim and Noam Scheiber that go beyond the standard-issue Twitter snark. The critique boils down to: Of course Tim Geithner is going to make millions in the private equity business. He has always been a creature of the financial industry, carrying its water in government. And now the financial industry is, in effect, repaying him. Future treasury secretaries will know the lucrative fate the awaits them if they are similarly cooperative with Wall Street mandarins. And the circle of life continues.

That's the anti-Geithner case, and there's something to it. Fishes don't know what water is, and similarly Wall Street executives can be blind to the excesses in their own industry and the usefulness of regulations to ensure a more stable system. And as Grim notes, the Dodd-Frank legislation doesn't really take on the private equity industry of which Geithner is now a part (what Grim leaves out is that it's not obvious why the legislation would have taken aim at an industry that had pretty much nothing to do with causing the financial crisis).

The way of looking at this that is more sympathetic to Geithner goes like this: He didn't take a mega-payout from any of the banks that he has regulated, which received government bailouts, and whose failures were proximate causes of the crisis. This isn't like Robert Rubin joining Citigroup for a highly lucrative job with no real management responsibilities after he was treasury secretary. He also is not going to work for any of the giant asset managers that oversaw bailout programs on behalf of the government, most prominently Blackrock and Pimco.

And in this sympathetic-to-Geithner view, working in private equity is less like being at a bank and more like being a titan of industry. You're taking investors' money and trying to deploy it in smart ways, acquiring companies, improving them and flipping them at a profit. Warburg Pincus makes money to the degree that it makes businesses more successful; one recent example was Neiman Marcus, the department store. It also has investments in some companies with more questionable reputations, like private education provider Bridgepoint.

So which is it? Is Geithner another story of the revolving door at work, or a smart guy who is going to try to use some of his insights and managerial acumen to help the economy deploy capital more efficiently?

The answer depends on which aspects of his job description you think Geithner is being hired for. In its news release, Warburg Pincus described Geithner's role this way: He will work closely with the co-CEOs on "overall firm strategy and management, investing and portfolio management, organizational and funding structure, and investor relations."

If Geithner's role turns out to be heavily oriented toward the last point — being a rainmaker, flying to financial capitals and using his fame and connections to persuade billionaires and foreign sovereign wealth funds to park their money with Warburg Pincus, the appointment will always seem, to use a technical government ethics term, icky. If he really is being hired to help run the firm and decide what companies to invest in, then more power to him.