As President of the New York Federal Reserve Bank, Geithner was an active partner with Paulson in the forced sale of Bear,Stearns to JP Morgan, as well as the failure to backstop Lehman causing their resultant fall into bankruptcy. In my opinion. LEH's bankruptcy was the main reason that the financial crisis accelerated globally in mid-September and spread through the world, causing  breakdowns of the financial system and the destruction of trillions of dollars of wealth in the United States and the world. The consequences of the LEH bankruptcy contribute mightily to the expansion of an expected mild recession into a possible depression.

Thus, the man who said no to Dick Fuld and failed to backstop Lehman bears a burden and a large stain on his reputation. I believe that it was probably Paulson acting alone, but, if it was Geithner who shared and participated in this decision, he's got a lot of 'splainin to do, and I for one would rather see someone else in charge.

There is no doubt in my mind that the removal of the uptick rule by Chairman Cox and the SEC in July 2007 - a rule that had been in existence for over 70 years - has been a major factor in the destabilization of the financial markets. Naked shorting has added another nail in the coffin.

I have nothing against short selling if it is done within the regulations, but the change in regulations by Cox has dealt a blow to market stability and, more importantly, Cox's failure to regulate properly and in a timely fashion has been a factor as well.

To show the extent of potential profits from illegal short selling, I paste in here an entry from an excellent website "Compliance Insights" (www.complianceinsights.com) which reveals the details of a recent SEC action in which two day traders, aided by a collusive brokerage house,
are alleged to have made over $2 billion in illegal profits over a one year period. Two guys, two billion, is just the tip of the iceberg of the illegal activity that plagues the markets. Add to this the increase in short selling because of derivatives, ETFs and futures, and you have a very unsafe market for traditional investors.

SEC Charges Day Traders in Short-Selling Scheme

"The SEC filed a civil injunctive action against 2 day-traders, Robert Beardsley and George Lindenberg, who allegedly perpetrated a manipulative short-selling scheme through brokerage accounts at a now defunct B/D, Redwood Trading.  In the complaint, the 2 engaged in a manipulative scheme by repeatedly shorting securities in violation of the then-existing "uptick" rule, with the intent to artificially depress the prices of shares that they had sold short in order to enable them to cover their positions at favorable prices.  In a related civil injunctive action, the SEC alleges that Dennis McNell, former CEO and COO of Redwood, aided and abetted their scheme and, in an unrelated fraudulent scheme, sought to hide substantial trading losses that he had incurred in a Redwood prop account. 

As part of their scheme, Beardsley and Lindenberg also failed to mark their orders as short sales in order to create the false appearance that their orders were long.  McNell enabled the scheme by disabling a feature of the trading software that was programmed to prevent violations of the uptick rule.  The two allegedly made $2.4bn in illicit gains in less than a year.  [SEC Litigation Release 20814, 11/19]"

Had they waited for the suspension of the uptick rule in July 2007, what they did would have been legal.

 Cox's suspension of the uptick rule legalized previously illegal behavior.