There is no person more central to Washington's bailouts of Wall Street than Treasury Secretary Timothy Geithner. As President of the Federal Reserve Bank of New York, he oversaw the federal bailout of Bear Stearns in March 2008 and under former Treasury Secretary Hank Paulson, Getihner designed the original bailout plan for the American International Group (AIG) later that same year. As Treasury Secretary, Geithner has enthusiastically assumed full authority over the $700 billion TARP fund first secured by Paulson under President Bush and he had continued to wield it in the same haphazard manner as his predecessor.

Considering these facts, one might think that the Obama administration would be shy about making the personification of Washington's Wall Street bailouts the front man for their supposed financial reforms. But no, Secretary Geithner took to the op-ed pages of The Washington Post yesterday to make the case for the President's version of finance reform. After a brief defense of his TARP management, Secretary Geithner writes:

As the Senate bill moves to the floor, we must all fight loopholes that would weaken it and push to make sure the government has real authority to help end the problem of "too big to fail." ...

Crucially, if a major firm does mismanage itself into failure, the Senate bill gives the government the authority to wind down the firm with no exposure to the taxpayer. No more bailouts. Instead, we will have a bankruptcy-like regime where equityholders will be wiped out and the assets will be sold.

But does the Senate bill's "bankruptcy-like regime" solve the "too big to fail" problem? No. In fact it makes it worse. What the Dodd bill actually does is create a new $50 billion fund to be used in “emergencies” for restructuring firms deemed too close to bankruptcy. And who gets to decide when there is an emergency and which firms are too close to bankruptcy?  You guessed it: Treasury Secretary Timothy Geithner. The Dodd bill is thus nothing but a permanent extension of Secretary Geithner’s TARP powers.

But not only does the Obama administration's finance plan further empower the exact same bureaucrats who failed to prevent the last crisis, it also makes it more likely that those same institutions that made risky bad bets before will make the exact same mistakes again. MIT professor and 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown author Simon Johnson explains how promised government bailouts increase the moral hazard that leads to "too big to fail" policies: "Creditors had only limited incentives to watch over major banks. Ordinarily, creditors should demand high interest rates on loans to highly leveraged institutions. However, the expectation that large banks would not be allowed to fail made creditors more willing to lend to them." By establishing a permanent Geithner-controlled "emergency" fund, Wall Street creditors will know they never have to watch over their counterparts: if things go bad, their buddy Geithner will have their backs.

Responding to conservative arguments that their finance reform plan encourages, not discourages, future bailouts, White House blogger Jen Psaki wrote yesterday: "The reality is that there’s a clear choice in this debate: to stand with American families or stand on the side of the big Wall Street banks and their lobbyists who are defending the status quo." Problem is, it is "the big Wall Street banks" that are supporting the Geithner permanent bailout plan. In their annual letter, current Goldman Sach's CEO Lloyd Blankfein and President Gary Cohn make the case for more Washington regulation. And as The Washington Examiner's Tim Carney documents, Obama raised about a million dollars from Goldman Sachs employees and executives in 2008, the most any politician has raised from a single company since McCain-Feingold. And the Obama administration employs many Goldman alumni/lobbyists including Chief of Staff Rahm Emanuel, White House economic advisor Larry Summers, and Treasury Chief of Staff Mark Patterson. So who is really on the side of the American people and who really is doing the work of Wall Street lobbyists?

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