Overhaul Read Free Page B

was excited to get an e-mail from his assistant, asking me to meet with him on December 18 at 8:30 A.M.
    Having allowed plenty of time in case of rush-hour delays, I arrived early at the gray, fortresslike Federal Reserve building on Liberty Street in downtown Manhattan. Ushered into a small sitting room, I waited until Tim, in his customary blue suit and white shirt, rushed in, dropped his BlackBerry and phone on a side table, and began my first job interview in years.
    Speaking in his usual concise, focused fashion, Tim explained that Treasury's traditional organization was unsuited to the current economic problems: there were more crises than there were formal jobs. And yet, he explained, it was hard to create new senior positions without congressional approval. So Tim was thinking in terms of tasks rather than positions, implying that he'd get to the specifics of positions and titles later. He mentioned four issues that might be appropriate for me to work on: housing, the immediate banking problems, longer-term financial policy, and autos.
    I said that I was open to discussing any of the possibilities and didn't want to make his impossible life more difficult by being finicky. Less than fifteen minutes into our scheduled forty-five-minute meeting, an assistant came to summon him to another meeting, and Tim stood to leave.
    "Do you have any questions for me?" I asked, disconcerted by this abrupt turn in my job interview.
    "No," he replied and was gone.
    Later, it struck me that the jobs Geithner had listed were like a four-point checklist of the financial and economic calamities facing the new President. With the collapse of the subprime mortgage market and the unprecedented fall in property values, homeownership had gone from the American dream to a debt nightmare for millions of families. The nation's biggest banks and investment houses were mostly crippled, threatening to paralyze the entire economy. Financial policy had clearly failed to guard against this, and once the emergencies were resolved, the question would be how to fix the system. And the auto industry, the once proud symbol of America's industrial might and still the employer of millions, was near ruin. If any one of these missions became mine, I thought ruefully, I certainly would not have to worry about being stuck in some purely honorary job.
    Like most Wall Street denizens, I had watched closely as these crises cascaded through the financial markets and undermined the broader economy. Our private equity investments were mainly in media and communications, sectors somewhat removed from the financial industry collapse. Nor did we engage in derivatives or subprime or risky lending in our other principal business: serving as the investment arm for Mayor Michael Bloomberg's personal and philanthropic wealth. So we did not feel the same sense of imminent peril that many of my friends experienced. At first the crisis was simply unnerving—also fascinating in a morbid sort of way.
    I followed the daily developments closely. As a private equity investor and mergers and acquisitions veteran, I was only vaguely familiar with the new lingo of Wall Street—special investment vehicles, collateralized loan obligations, super senior tranches, conduits and securitizations. Now I did my best to learn, often entreating friends who were closer to the action to explain to me the new alphabet soup of CLOs, SIVs, MBSs, and so on. Writing helped me collect and focus my thoughts. In 2007, I warned in the
Wall Street Journal
of a "coming credit meltdown." As the crisis developed, I contributed opeds on housing, on the likely emergence of better-capitalized banks, on what to do with Fannie Mae and Freddie Mac, on the future of private equity, and on the state of the economy (about which I was way too optimistic).
    For many months, Wall Street was in a muddle about what it wanted Washington to do. In March 2008, when the Fed saved Bear Stearns, many in the financial