Timothy Geithner (b. 1961) became the Secretary of the Treasury in the Obama Administration in January, 2009. Educated at Dartmouth and Johns Hopkins, he spent many years abroad. Previously he was president of the powerful Federal Reserve Bank of New York. He is a nonpartisan technical expert who worked for both republican and Democratic administrations. In 2008 he was deeply involved in the complex moves by the Federal Reserve and the Treasury to bailout banks in the Financial Crisis of 2008. That included $700 billion in money sought by president George W. Bush and passed by bipartisan majorities in Congress in October, 2008, and trillions in loan guarantees made by the Federal Reserve on its own authority. Geithner now is the person most responsible for bringing recovery to the economy.
Geithner got off to a very bad start, as his programs from 2008 have worked poorly, he was ridiculed and humiliated during his confirmation hearings for not paying taxes, his first major proposal as Secretary was uniformly repudiated by all sides, and the Treasury lacks (as of March 9) a single major senior official besides himself.
Treasury Secretary
In the confirmation hearings in January 2009 he was publicly humiliated by the Senate (controlled by Democrats) when it seemed he deliberately evaded over $40,000 of federal taxes. He paid the taxes and penalties and was confirmed, with most Republicans opposed.
Geithner and the Obama Administration moved moved to handle the crisis on two fronts. Working with Democrats in Congress (and three moderate Republican Senators), they passed the an economic stimulus bill, the "American Recovery and Reinvestment Act of 2009", with $500 billion of new spending and nearly $300 billion in new tax cuts. The stimulus will begin operations in mid-February, 2009, and supporters hoped it would slow the nosediving economy. Conservative critics feared it would be ineffective in the short run and add to the national debt and tax burdens in the long run.
Vague bailout plans
With banks on the verge of failure, Geithner unveiled yet another massive bailout program in mid-February. Trillions would be spent to move toxic assets out of the banks, but few details were provided. Geithner has the authority to decide what to do with the second tranche of $350 billion from the $700 billion banking bailout bill passed by Congress in October 2008. He does not need Congressional approval, but went to Congress on Feb. 10-11 to explain his plans. He proposes to create one or more "bad banks" to buy and hold toxic assets, using a mix of taxpayer and private money. He wants to expand a lending program that would spend as much as $1 trillion to cover the decline in the issuance of securities backed by consumer loans. He further proposes to give banks new infusions of capital with which to lend. In exchange, banks would have to cut the salaries and perks of their executives and sharply limit dividends and corporate acquisitions. But both Congress and the financial community expressed strong disappointment with the vagueness of his plans. E. J. Dionne, a prominent liberal commentator pointed to the "almost uniformly negative early reviews" of Geithner's rescue plan.[1]
References
- ↑ E. J. Dionne, "Centrism. Meh." The New Republic Feb. 12, 2009; Brian Knowlton, "Geithner Is Pressed for Bailout Details," New York Times Feb. 11, 2009