7th June 2011
But is his criticism fair? Not everyone thinks so, including the BBC's business editor Robert Peston.
In a speech in Atlanta, Geithner said: "The United Kingdom's experiment in a strategy of 'light-touch' regulation to attract business to London from New York and Frankfurt ended tragically. That should be a cautionary note for other countries deciding whether to try to take advantage of the rise in standards in the United States."
The latest remarks, although embarrassing for the UK, are actually directed at Asia where the US may fear those jurisdictions will lure business from the US with lighter regulation.
It is true that before the financial crisis, the light touch rhetoric of Prime Ministers Tony Blair and Gordon Brown antagonised the US and other countries.
However, others may view the US comments as a bit rich. The crisis hit many of the developed world's banks, including German and French banks, and if the City of London was one pole of the crisis, Wall Street was very much the other.
As Peston points out on his blog, it was domestic banks and former building societies which helped precipitate the crisis. They would have been based in the UK light touch or not. Peston notes that UK's light touch regulation certainly attracted companies to list in the UK, and encouraged hedge funds to locate here too but they did not create the crisis.
He writes: "This may not be our economic salvation, but no one can argue that the decision of a bunch of commodities companies – from Xstrata to Glencore – to list here has been our undoing." And he goes on to say "it would be ludicrous to argue that the UK economy has been tragically destroyed by private equity and hedge funds."
On the Telegraph comment boards, most agree with Peston. Lorriman writes:
"This crisis had more to do with government manipulation and failings than light-touch regulation. Weak leadership resulting in an unaddressed east-west trade imbalance, central banker ultra-low interest rates, bank bail-outs, government debt, subprime etc. The mantra of "debt is good" was created by the US and UK central bankers. A natural interest rate would not have created such a huge debt bubble."
lordbarnett is also affronted:
"Yes, America, the financial capital of the world that is bankrupt and is now telling us what to do,it's that special relationship we have with them you know."
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