or at least that’s what Timothy Geithner said about a hundred times in his book Stress Test: Reflections on Financial Crises. The book was a good recounting from the perspective of the Treasury though. After living through the financial crisis… partially as an employee of Washington Mutual, I have an appreciation for the crisis and the views on the bailouts that many in the country don’t.
I’ve read most of the stories about the firms involved or the situation in general. Stories such as The Big Short: Inside the Doomsday Machine, The Lost Bank: The Story of Washington Mutual-The Biggest Bank Failure in American History, Fatal Risk: A Cautionary Tale of AIG’s Corporate Suicide, and of course Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System – and Themselves. I am now an investor in many of the major players in the crisis, $AIG, $FNMA, $FNMAS, $MBI, and $BAC. Granted between my wife and I lost way too much money due to being wiped out as shareholders of Washington Mutual Bank. If I think about the profits I’ve had from investing in those firms, it still is far from the $100k we lost due to WaMu’s collapse. This personal connection to the crisis, even though I wasn’t directly involved in the assets that caused the collapse frames my appreciation for Geithner’s book on the topic.
His recollection of the crisis was self serving, but generally open. He is incredibly critical of the political process involved in managing a financial system, in a way that none of the other stories are. They all told stories about how gruff Geithner was to deal with and in turn Geithner is telling stories about how gruff the politicians who really controlled the purse strings were to deal with. The media added fire to the situation and he correctly points out that most of the things they did during the bailouts turned out to be the right things to do. This is a part of the story that is often not told. As a current shareholder of many of the firms that received a bailout of some kind, I completely understand how much money has been paid to the government as profits above their investment. The people of the United States came out ahead in this situation and Geithner’s story indicates he thought this would be the case (even though many disagreed at the time).
If you have an appreciation for the crisis in any way, I definitely recommend reading the book. If you are more interested in lessons learned from the crisis, skip it as Geithner isn’t to a place yet where he can reflect meaningful lessons about his experience during that time. Although, I do hope he does a book later in life when he gets a chance to really reflect on his experiences fighting crisis after crisis throughout his career as a public servant. In this book, he only left two rules of thumb for the entrepreneurs and operators who live every day to just get shit done.
- Be ‘for’ stuff, not just ‘against’ stuff – in other words, don’t be a critic with no value to add. It’s ok to not like an idea, but you better have an idea to bring to the table.
- No jerks, peacocks, or whiners – I really like this one, in the world of tech and finance, there are a lot of jerks, a lot of peacocks showing their feathers, and a lot of whiners. Don’t be one.
Anyone can learn from these two rules of thumb and I think building a team in any situation is better off when these two principles are followed. It is funny to think that out of all the things that happened during the crisis, the only two things that Geithner could bring up in his book and repeat as lessons were related to culture. That really helps you understand how important is culture.