Treasury nominee Geithner considered too important to fail
If Timothy F. Geithner were a bank, he might well be considered "too big to fail. "
The New York Times
WASHINGTON — If Timothy F. Geithner were a bank, he might well be considered "too big to fail."
In better economic times, Geithner's confirmation to be President-elect Obama's Treasury secretary might be in danger after the disclosure this past week that he had paid more than $48,000 in delinquent taxes and interest.
But with the economy so fragile, many senators are loath to rattle financial markets by rejecting someone with Geithner's qualifications and international respect. Republicans as well as Democrats were predicting he would survive the controversy and be confirmed this week.
At 47, he has broad experience in global economics, financial regulation, currency and monetary policy. And lately, as president of the Federal Reserve Bank of New York, he has been at the center of the government's efforts to manage the financial chaos, sharing some criticism for its mixed record but not blame.
"These are not the times to think in small political terms," said Sen. Lindsey Graham, R-S.C., who just returned from Afghanistan and Pakistan with Vice President-elect Joseph Biden. "I think he is the right guy."
Graham thereby validated what the president-elect had just said: That Geithner, by bipartisan agreement, is "uniquely qualified."
The controversy over his taxes, as it happens, goes to the one area where Geithner has the least experience, despite serving 13 years at the Treasury Department: domestic tax policy.
Geithner rose from a civil servant at the department at the end of Ronald Reagan's presidency to undersecretary for international affairs under former President Clinton, then was a director of the International Monetary Fund before becoming president of the New York Fed in late 2003.
Obama chose Geithner on Nov. 24, despite knowing of the tax issue.
Obama's hard choice was between Geithner and Lawrence Summers, who had been Geithner's mentor and boss at the Treasury Department in the 1990s, served as Clinton's final Treasury secretary and wanted another turn. In a first meeting with Obama three weeks before the election, Geithner, in characteristic self-effacement, told him, "Larry would be great as Treasury secretary," according to someone familiar with the meeting.
But Summers had drawbacks in the Obama camp's eyes. He had Clinton connections when the "change" campaign was trying to limit those ties. Summers also was known to have a sometimes difficult personality, and his troubled tenure as president of Harvard University had left some women's and minority groups bitter.
On Oct. 17, at a New York hotel, Obama and Geithner met for an hour and talked about policy and personal matters, according to accounts of the session. Obama, who spent four childhood years with his mother in Indonesia, asked Geithner about his own early years in India and then Thailand as his father oversaw Asia development programs for the Ford Foundation.
What neither man knew at the time, but the foundation has confirmed, is that Geithner's father, Peter Geithner, oversaw a program that Obama's mother, Stanley Ann Dunham Soetoro, had worked on. The two may even have met in Jakarta.
"They both have that kind of quiet confidence in their demeanor," a Geithner associate said.
When an Obama adviser asked Geithner if he wanted to be considered for the Treasury job, he said he had to first consult his family — his wife, Carole Sonnenfeld Geithner, a grief counselor for poor New York children whom he had met as an undergraduate at Dartmouth College, and two teenagers, Elise, 17, and Benjamin, 14. The job would also pay less than half of the $411,200 he made last year at the Fed. The family acquiesced, and Geithner turned over reams of records — including years of tax returns.
When Obama announced the nomination, he also named Summers as director of the National Economic Council, to coordinate policy from the West Wing.
Ever since, the biggest question among associates is how well the two men will get along, what with Geithner, the onetime underling, now "the chief economic spokesman for my administration," in Obama's words, and Summers, the former Treasury secretary, enjoying proximity to the Oval Office.
The morning of the announcement, Geithner and Summers had breakfast together in the Chicago Hilton. Since the Treasury years, they have continued to consult each other, friends say.
Geithner told others that he regretted that the weeks of media speculation had focused so much on Summers' reputed arrogance. He joked at his own expense that the news media's story line amounted to, "Larry is arrogant and smart; Geithner's not so smart but he's very humble."
In truth, Geithner is known as exceptionally smart and unafraid to speak up — traits that drew Summers' attention at the Treasury Department 16 years ago.
"I might worry if I didn't know it was Tim on the other end of the phone or across the street from Larry," said a former Treasury Department colleague of both men who did not want to be quoted because of the sensitivity of the confirmation process.
He said he'd seen them have serious clashes on an issue and "I've never seen them damage that relationship. And you can't say that about many people."
Copyright © 2009 The Seattle Times Company
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