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Geithner's political missteps undermine his policy moves

WASHINGTON — A week ago, Treasury Secretary Timothy Geithner looked like a dead man walking the National Mall.

He had emerged as a leading target in the public outrage over the AIG bonuses. And twice in a week he had received what in Washington is often seen as the kiss of death: the "complete confidence" of the president of the United States.

But then, Monday morning, Geithner pulled the sheet off his long-awaited plan to help banks dispose of toxic assets. The stock market soared. Even skeptical Republicans praised him for taking action.

"He has had to face a hell of a lot of hard questions," said Rep. Paul Kanjorski, D-Pa., chairman of a Financial Services subcommittee on capital markets that grilled Geithner over AIG on Tuesday. "But I perceive . . . he has taken a deep breath and a step back, and now he's coming forward with some good ideas."

Aside from the president, Geithner is most responsible for rebuilding confidence in the U.S. financial system among investors and the public, and for outlining a clear strategy out of the nation's economic swamp.

But within the political establishment he has yet to secure full support for himself or, by extension, the Obama administration's prescriptions for the economy.

"He's obviously a remarkably talented guy, but every time they stick a camera and a mike in his face, he kind of misses the opportunity to show how smart he is," said Rep. Adam Putnam, R-Bartow, a member of the Financial Services Committee.

"In a very short period of time he has accumulated a lot of self-inflicted wounds, and he's been a very inarticulate spokesman for America's economic recovery."

• • •

Being Tim Geithner means arriving at work before 6 a.m. to squeeze in a workout before launching into a string of meetings that will last the next 16 to 18 hours, including a daily briefing with the president.

It means addressing the worst economic crisis since the Great Depression with a skeleton crew: The White House named people to fill three of four senior deputy posts this week, but the Senate has yet to confirm them.

And it means defending the Obama administration's evolving response to the financial meltdown to lawmakers who are increasingly wary of using taxpayer funds to shore up financial institutions.

"This plan will work. This plan, because of the authority provided by the Congress . . . gives us broad ability to do what you need to get through a financial crisis like this," Geithner said.

At 47, the treasury secretary is fit and good-looking, with wavy dark hair. He spent the past five years as chairman of the New York Federal Reserve Bank and as vice chairman of the panel that sets U.S. monetary policy.

When Barack Obama tapped him as secretary, members of Congress were pleased to have someone who had helped engineer the bailouts of Bear Stearns and AIG and who helped create the Troubled Assets Relief Program, which the Bush administration created as a way to unlock credit by bathing banks in cash.

"That continuity was comforting," said Rep. Brad Miller, D-N.C., a member of the Financial Services Committee. "Since then, there is such disaffection by the American people and by Congress with the way the recovery programs . . . have been run, that continuity is not valued."

Last month, Geithner disappointed Washington and Wall Street by promising a plan to relieve banks of bad debt but providing few details. The stock market plunged.

At Tuesday's Financial Services hearing, Geithner faced sharp criticism for his legalistic approach to the AIG bonuses. The retention payments had been promised in contracts well before the government bought an 80 percent stake in the company, and federal officials chose to pay the bonuses rather than risk lawsuits.

"He has to understand the concerns of ordinary Americans and see things through the eyes of the American people," Miller said.

Wednesday, in a speech by Geithner at the Council on Foreign Relations, the dollar fell sharply after he appeared to give credence to a proposal by the Chinese finance minister to use an amalgamation of currencies, rather than the dollar, as the main international currency.

The dollar rebounded when Geithner clarified his remarks, but he was roundly criticized.

"I found that stunning," said Rep. Spencer Bachus of Alabama, the top Republican on the Financial Services Committee.

Even supporters acknowledge he still needs training. At a hearing Thursday, Rep. Ron Klein, D-Fla., told Geithner that given the outrage over the AIG bonuses, he must convince the public that his plan for relieving banks of toxic assets will benefit taxpayers.

Geithner nodded. "I agree with you completely. … The taxpayer will share in any gains that come from the purchase of these assets' management over time."

Klein nodded, then prodded him along. "And if we can, make sure that's very clearly articulated," the congressman said slowly. "Every step of the way."

Wes Allison can be reached at or (202) 463-0577.

Geithner's political missteps undermine his policy moves 03/28/09 [Last modified: Monday, March 30, 2009 4:08pm]
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