At Geithner's Treasury, Key Decisions on Hold
Monday, May 18, 2009
Seven weeks after the Treasury Department announced that it was ousting General Motors chief G. Richard Wagoner Jr. in the federal bailout of the company, he is still technically on GM's payroll.
Wagoner's removal has been held up because senior Treasury officials have yet to decide whether he should get the $20 million severance package that the company had promised him.
The delay is one of many hitches that have slowed a host of important policy actions in the four months since Timothy F. Geithner became Treasury secretary. While Geithner has taken dramatic steps to address flashpoints in the economy, the work of carrying out those policies has bogged down because critical decisions about how to do so aren't being made, interviews with a broad range of federal officials show.
Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department's top ranks. But some of the officials also cite the Treasury's ad-hoc management, which is dominated by a small band of Geithner's counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.
One of the department's signature initiatives, considered vital for getting at the root of the financial crisis, aims at relieving banks of their toxic assets. But to those familiar with the program, it remains unclear who will decide some of the practical details, such as whether foreign firms will be allowed to participate in the funds that buy the assets. This uncertainty is slowing the rollout of the program, which in any case has proven daunting to design. Announced in early February, it may not launch until July, officials say.
In March, Treasury officials clashed over a $15 billion initiative to use money from the federal bailout package to free up credit for small businesses. Geithner's counselors pressed to announce the program quickly, despite protests from the career staff members who said it would not work. Unable to raise the issue with Geithner himself, the staff members appealed directly to the White House but were rebuffed, according to sources familiar with the episode.
President Obama announced the program two months ago, and it is still struggling to get off the ground. Officials are looking to overhaul the proposal.
And in the wake of the public firestorm over bonuses paid by American International Group, senior Treasury officials have been meeting several times a week all spring to review, one by one, the payments to the company's executives. But the time-consuming discussions have never resolved whether any of the executives should get paid.
Geithner said in interviews that some of the department's internal difficulties result from the intense pressure on officials to develop a raft of rescue initiatives in a very short time.
"We were just putting enormous pressure on these people to put in place and execute this comprehensive set of programs," Geithner said. "In a crisis, the most important thing is to show the capacity for credible initiative that is actually going to fix the problem. That's why we are trying to do so much so early." He added, "It could get tough at times . . . but I think they are doing a great job in that context, and they are working 24 hours a day to put out A-plus policy."
Still, some lawmakers and government officials said Geithner needs to be a stronger manager.
"No one knows how to get decisions made," said a senior government official familiar with the Treasury's inner workings. "Major decisions can happen very fast at the top, and then after that there are tons of detail and nuances that have to get worked out without clear chains of command. Either the seats are unfilled . . . or you have to answer to a half a dozen counselors running around."