This interview with Tim Geithner strikes me as a hugely wasted opportunity. In fairness, the Q&A format doesn't lend itself to penetrating insight. Yet surely the interviewer, Daniel Gross, should have asked a follow-up on one answer that was really a non-answer to a key question, and asked another that went sorely begging. (Full disclosure, I worked with Gross on three occasions at CFO Magazine.)
First, Gross asked Geithner whether the financial industry was too large. And Geithner's answer was totally inadequate.
"Our financial system is much smaller, as a share of GDP, than the financial systems are in other major economies like the U.K.," he said. "The profit share of the financial sector was high because U.S. firms were the preeminent global institutions."
Perhaps Gross should have been more specific in phrasing the question to begin with, because the problem isn't how the size of our financial industry compares with that of other countries, as Geithner takes the question to be, but how the industry has come to dominate the US economy.
What's more, Geithner then shifts from talking about U.S. banks share of GDP to its share of industry profits, which is completely beside the point.
Surely Gross could have steered the discussion back on point with a follow up.
Then there's the topic that remains completely untouched, taxes on financial transactions and on windfall bonuses.
The U.K. and E.U. are both considering a financial transaction tax, and there are proposals for one in Congress, despite Geithner's express objections. In fact, he's on record as saying he opposes the transaction tax because it would fall on retail investors. But there are ways around that.
Meanwhile, the British are also about to impose a 50 percent windfall profits tax on bankers' bonuses. And some bankers are threatening to move to Spain or Switzerland to avoid it.
Surely there's controversy enough on the special financial industry taxes for Gross to be aware of. But you'd never know it from the content of this interview.
(The special tax break the Treasury arranged for Citigroup is yet another issue Geithner should be asked about, but news of that may have broken after this interview went to press.)