Timothy Geithner

NEWSWORTHINESS: after protracted congressional hearings dominated by his irregular tax returns, he has finally been confirmed as US president Barack Obama’s Treasury Secretary

Last June, one of Timothy Geithner’s friends expressed concern that the head of the New York Federal Reserve wasn’t getting enough sleep.

After the stress of negotiating bailouts for investment bank Bear Stearns and insurance giant AIG, his pal pointed out that the normally unflappable Geithner had been seen with bags under his eyes and stubble on his chin.

‘‘Justin, don’t you realise I live for this?” was the excited reply. ‘‘Crises like these are what it’s all about.”

If sleepless nights are what he’s looking for, Geithner has come to the right place. Last Monday, after lengthy hearings in the US Senate - which exposed some embarrassing irregularities in his tax returns - he was finally confirmed as president Barack Obama’s treasury secretary. Geithner’s mission is simple: to get a grip on the biggest economic disaster the world has seen since the Great Depression.

Roughly equivalent to our Minister for Finance, the Treasury Secretary is the US government’s senior economic official - charged with raising revenues, managing the government’s finances, overseeing the banking system and interacting with the Federal Reserve. It’s an important job at the best of times. The scale of the current crisis means that Geithner is one of the key players whose performance will determine the success or failure of the Obama administration.

By choosing this quietly-spoken technocrat over a host of more radical alternatives, Obama has clearly opted for continuity, rather than the change that was the mantra of his campaign.

A former Republican who has friends on both sides of the political divide, Geithner is almost universally described as cool, pragmatic and ruthlessly efficient.

He is also closely identified with the economic policies of the Bush administration, causing one liberal TV pundit to complain last week that his appointment was ‘‘like putting the arsonist in charge of the fire station’’.

In some ways, Geithner is an unconventional choice. Unlike most previous treasury secretaries, he has little experience in the private sector - and none at all as a commercial banker. Most of his career has been spent working for government agencies, which means he is well connected ,but virtually unknown to the American public.

Even a recent newspaper feature headlined ‘Ten Things You Never Knew About Timothy Geithner’ was reduced to using such fascinating facts as ‘‘he was born in August 1961’’ and ‘‘he is married to his college sweetheart, Carole’’.

As unexciting as Geithner may be, the president nicknamed ‘No Drama Obama’ clearly believes that his even temperament will be an asset in working through the blizzard of policy decisions on his desk in the 19th century building next to the White House.

The immediate challenges include allocating the remaining half of the $700 billion emergency rescue package passed by Congress last year, whether or not to aid the country’s failing car industry and how quickly to implement Obama’s promise to raise taxes on those earning more than $250,000.

There is also the small matter of the $825 billion passed by the House of Representatives last Wednesday - the highest figure in US history and the centrepiece of Obama’s strategy - to get the US’s economic engines humming again.

‘‘Life’s all about choices,” is Geithner’s favourite saying, according to those who know him well. The smooth trajectory of his career so far suggests that he’s adept at making the right ones.

Like his new boss, Geithner’s migratory childhood has given him an unusually internationalist outlook. Born in Brooklyn into a family with a long history of public service (his grandfather was an adviser to former president Dwight Eisenhower), his father’s expatriate duties with the charitable Ford Foundation meant spending time in Zambia, Zimbabwe, Thailand and India.

At one point, Peter Geithner worked with Obama’s mother, Ann Dunham, on a microfinance programme in Indonesia (the new president and treasury secretary were born within a fortnight of each other).

As a child, Geithner loved sport, and today he is still known to interrupt meetings to get the latest basketball scores. He has even been seen wearing skiing boots with a business suit. An amateur photographer in high school, he travelled to Cambodia and took some striking black and white shots of refugees that he later developed in the family’s Bangkok bathroom.

‘‘My parents gave me, among many wonderful things, the important gift of showing me the world as a child,” he later said. ‘‘I saw America through the eyes of others. And it was that experience - seeing the extraordinary influence of America on the world - that led me to work in government.”

After graduating from college with a degree in government and Asian studies, and a Masters in international economics, he landed a job with a consultancy firm run by Henry Kissinger. During his time there, he helped Richard Nixon’s former secretary of state to write a book on diplomacy and earned his boss’s praise as ‘‘someone who prevails with the power of his argument, rather than by charisma alone’’.

Geithner then spent 13 years as an official at the Treasury Department, where he served under three presidents and became a globe-trotting troubleshooter, negotiating aid packages for Thailand, Brazil, Indonesia and Mexico.

His big break came in 1999 when, as an assistant financial attaché at the US Embassy in Tokyo, he wrote what was widely considered a brilliant analysis of the South Korean financial crisis. The document drew the attention of then treasury secretary Larry Summers, who took on Geithner as a protége and elevated him to undersecretary for international affairs during the final years of Bill Clinton’s term in the White House.

Still very much a civil servant, rather than a political player, Geithner served as a policy director with the International Monetary Fund (IMF) between 2001 and 2003.He then took the helm at the New York Federal Reserve, the flagship of 12 regional branches of the US central bank. This effectively made him the bank’s chief representative to Wall Street, a role that assumed critical importance last year when some of the country’s most famous financial institutions ran into trouble.

As the global credit crunch escalated, Geithner became the chief architect of the Fed’s response. Last March, he helped to orchestrate the shotgun marriage of investment house Bear Stearns to JP Morgan Chase & Co, a deal that required the Fed to take over the management of nearly $30 billion of troubled assets.

Testifying before the Senate Banking Committee, some of whose members were extremely critical of his actions, Geithner defended the extraordinary intervention as the only way to avert substantial damage to the economy.

‘‘The market sorts out which companies survive and which fail,” he said. ‘‘However, under the circumstances prevailing in the markets, the issues raised extended well beyond the fate of one company.”

Bear Stearns, however, turned out to be merely a warm-up for even more dramatic government interventions. In September, Geithner tried - but failed - to find a buyer for investment bank Lehman Brothers, paved the way for Bank of America Corp’s abrupt purchase of Merrill Lynch& Co and helped to design what amounted to a government takeover of insurance company AIG.

Throughout these crises, Geithner consistently pushed for aggressive intervention in the various companies’ troubles, and forcefully defended the actions of Bush’s treasury secretary, Hank Paulson. Among the American public, however, there remains deep scepticism over the wisdom and fairness of the bank bailouts.

When Obama was elected, the initial speculation about the treasury was that Summers would get his old job back. Instead, Summers took on the role of head of the National Economic Council. In fact, the president-elect had earmarked Geithner for the post after being impressed with him during a private meeting in October. The appointment was warmly received by Wall Street ,with the Dow Jones industrial average surging by almost 500 points on the day of the announcement.

At first, Geithner’s confirmation by the Senate seemed like a formality. The proceedings took an embarrassing turn, however, when it was revealed that he had failed to pay $34,000 in taxes, dating back to his years at the IMF.

Since international organisations are exempt from social security taxes, US citizens who work there are supposed to pay them as if they are self-employed. Geithner, who as Treasury Secretary is now in charge of the US Revenue, claimed that he had simply been ignorant of the rule. To add to his discomfiture, a further investigation found that he had employed an illegal immigrant as a housekeeper.

Geithner’s problems were not all purely domestic. People on Wall Street were surprised when it emerged that he had attacked China in his written responses to the Senate Finance Committee, explicitly accusing it of manipulating its currency.

Since Geithner is about to become the biggest bond salesman in American history, attempting to finance what will be trillions of dollars in new debt obligations, observers found it hard to understand why he would go out of his way to insult such an important source of funds.

In normal times, Geithner’s nomination would probably have failed. Given the extraordinary circumstances, however, as well as Obama’s clear desire to have him confirmed, he was eventually approved by 60 votes to 34 - the narrowest margin of any Treasury Secretary nominee since World War II.

Less than an hour later, the president himself showed his support by rushing over to the Treasury Building and attending the swearing-in ceremony.

Softly spoken and physically unassuming, Geithner is an easy man to underestimate. During his early public appearances, the microphone had to be cranked up to record his comments. In private, however, he can be extremely forceful and willing to exert his power whenever necessary. At the height of the Bear Stearns controversy, one of his colleagues sent him an e-mail in Latin reading:

‘‘Illegitimum non carborundum,” along with his translation: ‘‘Don’t let the bastards get you down.” Geithner replied that his grandfather had the same slogan on his kitchen wall - and that he was thinking of moving it into his office.

In a rare interview in early 2007,Geithner told the Wall Street Journal: ‘‘Most consequential choices involve shades of grey, and some fog is often useful in getting things done.” With so many choices to be made and things to be done, expect the US Treasury to be clouded in fog for some time to come.

http://archives.tcm.ie/businesspost/2009/02/01/story39182.asp

Yeah, why would anyone have any doubts about this guy!!? Probably childhood friends with Obama and given the same socialist indoctrination. America, BOHICA!