Geithner Grilled on His Past, Path Forward
Nominee Asked to Detail Strategy for Allocating Rest of Bailout Funds
Thursday, January 22, 2009
Treasury secretary nominee Timothy F. Geithner said yesterday that the Obama administration would unveil a three-pronged strategy within weeks to aid financial firms, struggling homeowners and the consumer credit markets using the remaining $350 billion of the government's financial rescue program.
"The ultimate costs of this crisis will be greater if we do not act with sufficient strength now," Geithner told the Senate Finance Committee during his confirmation hearing. "In a crisis of this magnitude, the most prudent course is the most forceful course." He promised that the Obama administration would offer a "clear plan" but provided few specifics.
Geithner, 47, also faced tough questions about his role last year in devising federal bailouts for Wall Street's biggest firms and his failure to pay all of his taxes on time between 2001 and 2004.
Geithner, who settled his outstanding taxes only after he was nominated to the Treasury post, said he signed his tax forms without reading them carefully. "These were careless mistakes. They were avoidable mistakes, but they were unintentional. I should have been more careful," he said. He apologized to committee members for making them spend time on his personal history when the nation faced more pressing issues.
Although lawmakers from both parties expressed misgivings about Geithner's personal tax history -- pointedly noting that he would be overseeing the Internal Revenue Service as Treasury secretary -- they said they were even more concerned about the worsening financial crisis and viewed him as the right man for the job.
Even key Republicans predicted that Geithner, the president of the Federal Reserve Bank of New York, is unlikely to encounter serious obstacles on his path to the Treasury Department, where he would serve as Obama's top adviser on the financial crisis and manage a $700 billion financial rescue program. The Senate Finance Committee is set to vote on his nomination today.
Sen. Charles E. Grassley of Iowa, the committee's ranking Republican, said that Geithner's qualifications and role in carrying out the government's financial rescue program "gives him unique insight" during a critical time in the crisis. Grassley said that "to some he isn't merely the best choice, to some he is the only choice," but that his tax history would reflect poorly on a Treasury secretary.
A full floor vote could happen as early as Friday, but any Republican in the Senate could hold up the nomination, leaving Stuart Levey, a Bush administration holdover who oversaw a terrorism finance enforcement division, in charge of the Treasury.
If Geithner's confirmation is delayed, Senate Majority Leader Harry M. Reid (D-Nev.) said yesterday that he would force cloture votes over the weekend.
Aside from his tax history, lawmakers grilled Geithner on his strategy for the remaining financial rescue funds.
Geithner said his department would aim to remove constraints that hinder small businesses, car buyers, students and municipalities from getting loans.
The administration is also considering establishing a "bad bank" to buy toxic assets that are at the core of the financial crisis because they prevent banks from lending to each other, he said.