On Topic: The hard stuff
Target admitted it had messed up.
“With the benefit of hindsight, we are investigating whether, if different judgments had been made, the outcome may have been different,” a Target spokeswoman said in a March news release.
By “outcome,” she meant that credit and debit card information for 40 million Target customers had been hacked during last year’s Christmas shopping season. In addition, email addresses and other personal information for some 70 million had been snatched, the retail chain admitted.
Here are some further “outcomes” from that security breach:
•Some 21.8 million credit cards were reissued by banks to protect their customers, according the estimates by Brian Krebbs, a former Washington Post reporter, on his KrebbsonSecurity.com blog. You, me and lots of others were scratching our heads to recollect when we’d last been in a Target and, if so, which card we’d used.
•Target reported it spent $61 million in its fiscal fourth quarter in connection with the mess. It said it anticipated that it would have to continue forking out money to contain the situation. I imagine that translates into spending technology-wise, legal-wise and credibility/public-relations-wise.
•Several federal and state investigations have been set up to look into what Target did and did not do. Plenty of lawsuits are in the works — about 90, by one recent count by Bloomberg BusinessWeek.
•No one has been arrested for the cybercrime, and fingers still point toward Eastern Europe.
•The chain fired 475 employees — most at its Minneapolis offices — in January, and said it wouldn’t fill some 700 vacant positions. The retailer blamed poor sales caused by the security mayhem. Its stock certainly has experienced a series of unhappy bounces since.
•Several Target officials have testified before Congress — which, of course, doesn’t equate into quick action on any front. CEO Greg Steinhafel stepped down in early May.
So bad things happened, customers lost confidence in Target, and the retailer, from the chief executive down to the worker bees, got punished — even if the folk in the mailroom or wherever were innocent bystanders to the whole debacle.
Yet here we are, some half-dozen years after the greed, myopia and clumsiness — pick your own descriptor — that let loose the wolves of the global Great Recession, and Timothy Geithner is on a book tour.
Geithner was in the front row of the main circus, as New York Federal Reserve president from 2003 to 2008 and U.S. Treasury Department secretary from 2009 until this past year.
As such, he and his pals were tasked to be the eagle-eyes on the lookout for financial tempests. Yet somehow they missed the warning signs being whipped up by Wall Street lending shenanigans.
In his book, “Stress Test: Reflections on Financial Crises,” published a few weeks ago, Geithner admits to not seeing the human suffering caused by the economic craziness — the anxiety provoked, personal savings that were squashed, and jobs that were lost and have yet to return for many.
And he confesses he didn’t always do well at making his case. In his first public address as head of the Treasury, Geithner writes that, “It’s fair to say the speech did not go well.”
He looked “shifty” — Geithner’s term — on television. Before he’d even concluded his speech, stocks dropped more than three percent, “and nearly five percent by the end of the day.”
“Stress Test” offers blessedly few graphs and charts, and covers many meetings, complete with Hershey’s Kisses, cheeseburgers and comments from President Obama such as “Let me get this straight” and “How the hell did this happen?”
(My favorite remark, though, was from Larry Summers, Treasury secretary under President Clinton and by this time head of the National Economic Council: “You know, this stuff is really hard.”)
The book is clear and well written, and it explains what the arguments were, who said what and how complicated decisions were made. You come away believing Geithner, faced with a frightening host of complex and painful choices, did his best to right the ship. (He concedes, for example, that the final version of the Dodd-Frank Wall Street Reform and Consumer Protection Act was “a mixed bag.”)
He may well have been the right guy to have in this struggle.
But “Stress Test” still leaves us wondering — how did Geithner and company not see the storm clouds gathering (to paraphrase longtime Washington-watcher Aaron Sorkin) back in 2007?
In an April 15 essay, the Economist magazine summarized five financial crises. It skipped the tulip market crash of 1593 (a real thing, look it up), but it did detail events from 1792 to “the big one” of 1929.
One of its key points was that steps taken after one disaster tend to become cornerstones of our economic systems going forward — right into the next financial car wreck.
So the real questions we need to keep asking are these: What have we learned? And what the heck are we going to do with that realization before another bunch of less-than-honorable folk want to game the system?
I’ll be right here if you have the answer. Let me know.
•Michael Chevy Castranova is Sunday editor of The Gazette. (319) 398-5873; email@example.com