Do you remember what Tim Geithnner said back on March 1st, 2006?
Timothy F. Geithner is the president of the Fed Bank of New York and he warned that the U.S. financial system is evolving faster than the ability of investors, lenders and regulators to evaluate and manage the risks involved.
The rapid growth in complex new investment instruments and recent changes in market structure have helped make the nation's financial system more flexible and resilient...But, "there are aspects of the latest changes in financial innovation that could increase systemic risk" -- the danger that the losses of a few investors could set off a chain reaction of events that disrupts the broader financial system, as did the near-collapse of a heavily leveraged hedge fund in 1998.
Business Week writes that analysts listen to what Geithner says because ...the bank he runs is the most powerful of the Fed system's 12 regional banks. Moreover, Geithner is a close adviser to Fed Chairman Ben Bernanke.
Geithner spoke at a conference sponsored jointly by the Federal Reserve Bank of New York and Princeton University.
The New York Fed chief said central bankers are concerned about a snowball of fear in the markets, or what he called "the risk of an adverse, self-reinforcing dynamic in which concerns about overall liquidity magnify concerns about credit problems." (my emphasis)Tim Geithnner FED Mover Mike
