The right man for the job
Tim Geithner, President-Elect Barack Obama’s selection for the next Treasury Secretary, is the right man for the job.
But for the honor, I’d just as soon walk
Actually, unless one wanted to follow President Bush’s suggestion – an AHI exclusive – of leaving Hank Paulson in place, Mr. Geithner is about the only man who can assure continuity and context to what continues to be the most turbulent financial times in at least a generation. As his biography is summarized in a recent Wall Street Journal:
Ready to roll up his sleeves to restructure
Mr. Geithner served as a Treasury attache in
Mr. Geithner has spent most of his career managing government responses to financial crises, from the 1990s bailouts of
It’s hard to imagine someone having experience with multiple currency/ financial market meltdowns, but Mr. Geithner has it.
Mr. Geithner (pronounced GYTE-ner) pushed for earlier intervention in the financial markets to stem the financial crisis, and looks likely to continue that activist approach in his new job.
Assuming this precis is accurate, a track record of sounding rational warnings is also helpful. Certainly Mr. Geithner’s active involvement in the Bear Stearns liquidation shows a courageous willingness to act on one’s judgment.
Mr. Geithner gained respect among Wall Street chiefs over the past year for his hands-on role in the credit crisis. For instance, he was instrumental in engineering the government-assisted rescue of Bear Stearns.
While others were fleeing, Mr. Geithner was organizing Bear’s recapitalization
Interesting, isn’t it, that Bear Stearns’ shotgun wedding to JPMorgan at a fire-sale price is now described as a ‘rescue’? How quickly we forget!
Among his first priorities could be a large fiscal-stimulus package.
If he were to be advocating macroeconomic stimulus, Mr. Geithner would be going beyond his previous capital-markets experience. He might also become entangled in partisan politics:
In addition to tackling the financial crisis, Mr. Geithner will have to deal with the
Let us all pray for better economic times
With any luck, Mr. Geithner will not be called upon to explain how Mr. Obama will cut those taxes without further exacerbating the deficit is unknown.
But the likely choice appears to have been driven largely by the financial crisis, and Mr. Geithner’s public record on many of the other matters he will be required to grapple with is limited. Unlike previous picks for Treasury secretary, who hailed from Wall Street, industry or the Senate, Mr. Geithner has been a technocrat most of his career.
Technocrats of the world salute you!
Just what I need, the geek squad endorsement
Mr. Geithner isn’t considered close to Mr. Obama, either, an anomaly for one of the most critical positions in the cabinet.
More evidence that he was chosen purely on merit.
Mr. Geithner has never made a political contribution to any candidate for federal office, according to the Center for Responsive Politics, and has worked for both Republican and Democratic administrations.
I like him even more!
Economist Douglas Holtz-Eakin, a senior policy adviser for Sen. John McCain’s presidential bid, said that the Republican, had he won, would also have considered Mr. Geithner for the Treasury post. “I don’t want this to sound demeaning, but he’s an excellent mechanic,” Mr. Holtz-Eakin said. “He knows the nuts and bolts.”
When capitalism’s engine is in danger of breaking, you need a mechanic.
Here’s how you turn the economy up and down
Mr. Geithner has worked closely with Federal Reserve Chairman Ben Bernanke throughout the crisis, in many cases to implement the complicated new lending programs the Fed has conceived. The two would be expected to continue to have a close partnership as the credit crunch unfolds.
Bernanke, of course, stays on as Chair of the Federal Reserve. In short, picking Mr. Geithner is the closest thing (other than leaving Mr. Paulson in place) to perfect continuity with the current policies.
Lawmakers, many of whom are disgruntled with the current administration’s handling of the crisis, could present Mr. Geithner with the hard task of proving he’s not going to follow the existing playbook. Other constituencies to be smoothed could include the labor movement, which has expressed unease at a candidate it doesn’t know.
That’s all well and good, but none of that will stop Mr. Geithner from being confirmed.
When you’ve been in the pit before, you know what to expect
In the end, it was Mr. Geithner’s reputation for diplomacy, his familiarity with Wall Street and the respect he commands with Democrats and Republicans alike that tipped the scales, congressional aides suggested.
In short, he’s confirmable, as he should be.
Confirmable? Moi?
If confirmed, Mr. Geithner will face a barrage of critical decisions on such things as where to aim the $700 billion rescue fund, whether to ask Congress for more money and how best to structure an economic stimulus package that some CEOs are saying should top $300 billion. His mentors, Messrs. Summers and Rubin, have both said a big stimulus is needed.
Most pressing will be the fate of the Troubled Asset Relief Program, or TARP. With Mr. Paulson indicating he doesn’t plan tap the second half of the promised $700 billion, Mr. Geithner will have to determine how quickly he wants to access that money and where he wants to direct the funds.
TARP isn’t Mr. Geithner’s personal ATM.
Make sure you have the votes first
Under TARP, Treasury must ask Congress for the additional money.
But I know how to ask
One Obama adviser said the Treasury nominee will likely back using some of that money for its original purpose, the buying of toxic assets from ailing financial firms, and give more detail on how the incoming administration plans to tackle the falling home prices and rising home foreclosures that are at the root of the crisis.
For Treasury to buy complex non-performing financial assets directly, it will need an army of brain surgeons to do the restructuring. We can be hired J …
Mr. Geithner will also be wading into a debate over the future of financial regulation. In March, before the financial crisis had even claimed its first major victim, Mr. Geithner attributed the market turmoil to a combination of market forces and incentives created by policy and regulatory decisions. He said the
Catastrophe is a precondition to fundamental reform, and Mr. Geithner is in an excellent position to select wise reforms:
Mr. Geithner was one of the first officials to warn about a financial instrument, known as a credit-default swap, which investors buy to protect against defaults on corporate and other types of debt.
On Friday, the Dow Jones Industrial Average jumped on the Geithner news, ending the day 6.5% higher at 8046.42, recouping more than half the week’s losses. Even some financial firms, which had been battered all week, took back some ground, although Citigroup fell another 20% to a 16-year low.
The market “was screaming for some semblance of leadership from the new administration,” said
It was.
I vote for Tim!
Write a comment