Bove serves Geithner up hot

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Treasury Secretary Timothy Geithner should have done more to stop the financial crisis before it started, rather than try now to impose unnecessary reforms on the banking system, analyst Dick Bove said.

In a a much-discussed op-ed piece Friday for The Wall Street Journal, Geithner says a collective “amnesia” about what caused the crisis drives opposition to reform. He adds that “financial safeguards” during the crisis that exploded in 2008 “were tragically antiquated and weak.”

“Only four years after the financial crisis began to unfold, some people seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform,” he writes.

But Bove, who is vice president of equity research at Rochdale Securities, said the Treasury secretary’s memory may be a bit short as well.

Geithner, while at Treasury, supported the 1999 Gramm-Leach-Bliley law that helped unleash the too-big-to-fail institutions that required bailouts, and failed to flag any of the financial system excesses, particularly in the mortgage market, that drove the crisis, Bove said.

“Quite frankly, I find this article almost unbelievable in its lack of veracity in explaining the past, and even more outrageous in failing to understand what has been done to harm the future,” Bove wrote in an analysis.

When Geithner took over the New York Fed in 2003 he never protested excessive risk taking by banks, Bove said.