Who is Tim Geithner?

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The Bear bailout is an ordeal Geithner is loath to repeat, even though he knows he may have to. He’s already anticipating the regulatory shifts that must be implemented if the markets are to withstand further shocks. “We’re going to need to change a whole bunch of aspects of our financial system,” Geithner says, speaking quickly and leaning forward in his chair. “We should not have a system that’s this fragile, that causes this much risk to the economy.”

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The reform process has started creaking forward, with a wide-ranging (and swiftly dismissed) series of proposals by Treasury Secretary Hank Paulson. Meanwhile, Geithner has begun sending teams of examiners to the major investment banks to pore over their books and risk-control policies. Since the Bear blowup, he has also been urging bankers to boost their capital levels.

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It doesn’t help that the deal is teeming with connections that are sure to raise questions. [JPMorgan Chase Chief Jamie] Dimon is one of the three class-A directors of the board of the New York Fed, and its head is Stephen Friedman, a former Goldman Sachs chairman, who still sits on the investment bank’s board. The New York Fed’s board also includes Richard Fuld of Lehman Brothers, a firm that is another oft-rumored potential candidate for a bailout. Fuld is a class-B director, meaning that he is elected by member banks, astoundingly, to represent the public. (Friedman is also supposed to be looking out for you: He was “appointed by the board of governors to represent the public.”) Thus Geithner reports to a board that is composed of people who are not only under his purview but would also benefit from any potential bailouts. The structure of the New York Fed’s board bears more than a passing resemblance to that of the New York Stock Exchange in the bad old days, when member firms, regulated by the N.Y.S.E., were heavily represented on its board.

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Even more intriguing is Geithner’s informal brain trust, loaded with Wall Street luminaries. Since coming to the Fed in November 2003-recruited by then-New York Fed chairman Pete Peterson, co-founder of the Blackstone Group-Geithner has learned the ways of the financial industry at the feet of some of its biggest legends. He was almost immediately taken under the wing of Gerald Corrigan, a gregarious former New York Fed chief who is now a managing director of Goldman Sachs. Corrigan describes his relationship with Geithner as close, and it has flourished since Geithner’s first days at the Fed. Another frequent adviser-”you don’t want those things to get too formal,” Corrigan notes-is also a preeminent banker, Merrill Lynch C.E.O. John Thain, a Goldman alumnus and former head of the N.Y.S.E.? Over the years, Thain has often talked to Geithner-”sometimes I talk to him multiple times a day,” Thain says. Geith­ner’s network also includes former Fed chairman Alan Greenspan, an old acquaintance, as well as the heads of the European central banks, hedge fund managers, academics, and his immediate predecessor, William McDonough, architect of the 1998 Long-Term Capital Management bailout and now a vice chairman of Merrill [...]

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One way of looking at these relationships is that they put Geithner in the loop with people he must know if he is to get a handle on the maddeningly complex financial markets. Corrigan has decades of experience at the Fed and on the Street, and Thain, recently brought to Merrill after the firm wrote down billions in subprime losses, is one of the leading experts on mortgage-backed securities and other intricate financial instruments. You could even make a case that Geithner would be falling down on the job if he didn’t keep in touch with the Thains and Corrigans of the world. “People don’t understand how important those relationships are, especially when you’ve got to deal with complex and difficult situations,” Corrigan says. “Relationships are critical, and Tim has done a terrific job of developing those relationships.”

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Corrigan says that they “talk about everything under the sun,” except for monetary policy. “He brings in groups of people. That includes, at times, some of his old Treasury buddies,” like former secretaries Larry Summers and Robert Rubin. “As I said, he has really worked at this networking thing I keep talking about.”

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Of course, these aren’t exactly chitchats among people who meet casually at some South Street Seaport bar after work. This is networking between a central banker and the heads of the capital-hungry investment firms over which he holds sway. You might argue that Geithner’s relationship to his charges is even closer than the typical regulator’s. No other regulatory agency is in a position to loan crucial billions to the entities it monitors.