In a New York Fed Minute

The NY Times has a long semi-unflattering story about the Indispensable Man's tenure at the New York Fed, including choice exerpts from his calendar showing meetings, and even (horrors!) lunches with the powerful bankers he was regulating:Geithner, as Member and Overseer of the Finance Club

For all his ties to Citi, Mr. Geithner repeatedly missed or overlooked
signs that the bank — along with the rest of the financial system — was falling
apart. When he did spot trouble, analysts say, his responses were too measured, or too late.

In 2005, for instance, Mr. Geithner raised questions about how well Wall
Street was tracking its trading of complex financial products known as derivatives, yet he pressed reforms only at the margins. Problems with the risky and opaque derivatives market later amplified the economic crisis.

As late as 2007, Mr. Geithner advocated measures that government studies said
would have allowed banks to lower their reserves. When the crisis hit, banks were vulnerable because their financial cushion was too thin to protect against large losses.

In fashioning the bailout, his drive to use taxpayer money to backstop faltering firms overrode concerns that such a strategy would encourage more risk-taking in the future. In one bailout instance, Mr. Geithner fought a proposal to levy fees on banks that would help protect taxpayers against losses.

The bailout has left the Fed holding a vast portfolio of troubled securities.To manage them, Mr. Geithner gave three no-bid contracts to BlackRock, an asset-management firm with deep ties to the New York Fed.

There is a fine line beween preventing systemic risk and regulatory capture (is it like being captured by robots?), wherein the perspectives of the regulated become the perspectives of the regulators. In the Indispensable Man's case, the problem is not "capture," it's competence. The various emergencies he presided over, along with Paulson and Bernanke, - Bear Sternes, Lehman, AIG, the Reserve Fund, Fannie & Freddie, etc - arose through a combination of lax regulation and corporate insiders who were simply lying about the state of their firms right up to the moment they showed up on Friday afternoon to be rescued before the Monday markets opened. It wasn't until there was a full-bore crash that the regulators acted and by then it was too late.

I don't really care who had the Indispensable Man had lunch with. I care that his (and others') inaction has created a near infinite collection of liabilities for tax payers in a very short period of time, and that such liabilities show no sign of having alleviated the systemic risk that has been weighing down the economy.