Storm of criticism said to buoy Treasury Secretary Timothy F. Geithner
Saturday, November 21, 2009
Treasury Secretary Timothy F. Geithner has been a lightning rod for the Obama administration even longer than he's formally held his position. This week, the storm clouds returned.
Renewed doubts about his role in the financial bailout coupled with stubbornly grim news about the economy put him on the defensive on Capitol Hill, forcing the White House to offer a new public endorsement of Geithner. And after he participated in an unusually testy hearing with lawmakers on Thursday, even former Treasury officials from the George W. Bush administration called the department to offer encouragement, saying that they sympathized because of similar criticism they'd endured last year while ramping up the financial bailout initiative, according to Geithner's aides.
"We know we have a fight on our hands," one of those aides said.
At the White House, senior advisers to President Obama said Friday that they were not alarmed by Geithner's rough treatment at the hands of Republican lawmakers on the Joint Economic Committee, which even included a call for him to resign. The advisers dismissed the concerns raised by Republicans as political posturing, and said they are buoyed by the economy's gradual improvement over the course of the year.
"Secretary Geithner has helped steer the American economy back from the brink, and is now leading the effort on financial reform," White House spokeswoman Jen Psaki said. "His focus today -- and ours -- is on economic recovery and addressing the challenges the American people face every day."
Much of the anger directed at Geithner arises from growing frustration with the administration's inability to stem rising unemployment, even as the economy has resumed growing and the financial sector has rebounded from crisis.
"There is a lot of resentment," said Simon Johnson, a professor at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund. "A lot of people are dissatisfied."
Ties to banks
Johnson said that Geithner is saddled by his long-standing ties as former president of the New York Federal Reserve Bank to many of the prominent bankers and large financial firms that received billions of dollars in federal bailouts. As Wall Street recovers and resumes its practice of paying hefty bonuses, a sense of bitterness has taken root among Americans, Johnson said. "The real issue he can deal with is how the banks are treated," Johnson said, adding that the administration has "not dealt with the power and hubris of the banking system that got us in this trouble."
More than any member of the Obama cabinet, Geithner has come under criticism. After he was nominated to be Treasury secretary, it was disclosed that he had failed to pay more than $40,000 in taxes between 2001 and 2004, causing consternation among some lawmakers as they considered his confirmation.
Then, when Geithner unveiled the administration's initial plan in February to rescue the financial system, stocks plummeted and he faced harsh reviews from critics who said the plan lacked clarity and detail. A month later, he was again buffeted by disclosures that Treasury and Federal Reserve officials had allowed American International Group to pay more than $165 million in bonuses to employees despite a government bailout worth tens of billions of dollars.
Concerns about the government rescue of AIG and Geithner's role in it surfaced again this week. A government watchdog reported Tuesday that last fall, when Geithner was president of the New York Fed, he approved using taxpayer money to pay AIG's creditors at full face value. Neil Barofsky, the special inspector general for the bailout, said the New York Fed had made only a passing effort to get them to accept discounts. Cue the angry press releases and calls for more hearings on the issue.
On Wednesday, one House Democrat said "no" when asked during a television interview whether Geithner should keep his job.