Tim Geithner and Charlie Rose

Tax cheat and Treasury Secretary Tim Geithner sat down for an interview with Charlie Rose on Tuesday.

Watch the entire interview here.

In this clip, Geithner and Rose talk about the dramatic economic changes we're experiencing. Geithner's view is that this economic swing is in a different league than what we've seen in the past. Structural change is required to address it.

Geithner says that capitalism itself will be different and the financial system will be dramatically different. He says the system has already changed profoundly, and to expect more changes.

That's scary.



Transcript

CHARLIE ROSE: But did you see this coming?

TIMOTHY GEITHNER: This crisis coming?

ROSE: Yes, did you see that Citibank, which was under your jurisdiction in New York, was in deep trouble? Did Bob Reuben see they were in deep trouble? Did a whole range of people who had performed well in different circumstances see what was going on?

GEITHNER: Charlie, most people missed this...

ROSE:Because?

GEITHNER: ...didn’t see ...you know, it’s a hard thing to understand. I think that probably was, you know, we had a long period where growth was becoming more stable. People became more optimistic of the future. They projected that optimism in the future and that created the conditions where people took more risks than they should have, and they, frankly, didn’t pay enough attention to the possibility that when this ended, came apart, that the consequences would be as damaging as they did. Now, I spent almost every day from the first time I walked into the New York Fed about five years ago working with my colleagues on ways to try to make the system stronger so we were going to be better able to withstand the kind of pressures that would come when this came apart, and we did some very important, powerful things, but many of those things didn’t have enough traction, and we share with really all parts of the financial oversight bodies here and around the world a deep responsibility for not having done more and a really deep obligation for trying to fix this quickly and put in place the kind of reforms to prevent this from happening again. But I was, like many of my colleagues, deeply worried about the boom and leverage and it’s possible consequences --

ROSE: And the bubble in the housing market and all of that.

GEITHNER: Yeah, exactly. And you know, as you saw in the United States, the Federal Reserve did move very, very aggressively, so as the crisis began in the middle of '07, the Fed was very, very aggressive in trying to cushion and contain the damage caused by this catastrophic adjustment in the financial system.

ROSE: What is surprising about this? And you said to me how fragile the system is...

GEITHNER: Yeah, yeah. Our system...

ROSE: How fragile it had become.

GEITHNER: Our system was not designed to sustain a shock, a crisis of this magnitude. It’s the tragic failure of financial regulation in this country. It was just not designed to tolerate anything of this magnitude. The critical test of any financial system in some senses is how you deal with stress and shock because you want a system that’s going to be strong and resilient enough to handle almost anything it could face. And this system didn’t meet that test because we had a regulatory framework that was designed, largely, 90 years ago and did not adapt to take account of these huge changes in the structure of our financial system.

ROSE: Will capitalism be different?

GEITHNER: I think capitalism will be different, and the financial system will be dramatically different. It’s already dramatically different. Again, if you look at the scale of adjustment and restructuring in the financial system, it’s already happened. It’s profound in scope already. So if you just look at the system today relative to what was true three years ago in terms of the institutions that existed then, and their basic shape has changed dramatically. And there’s going to be more changes ahead. But I think it will emerge stronger. This will clean out a lot of the excesses and bad practices, and those that don’t get cleaned out just by experience and knowledge now, better regulation oversight, better rules to the game, enforced more cleanly, we’ll fix.

I have no confidence in tax cheat Geithner.

This is the guy who was called so brilliant and so critical to the effort to save the country from a complete economic meltdown that his "shortcomings" just had to be excused.

I don't think Geithner knows what the hell he's talking about. He looks scared. He's in over his head.