Treasury Secretary Geithner Heads for the Exit

by John M. Curtis
(310) 204-8700

Copyright July 4, 2011
All Rights Reserved.                                         

             President Barack Obama was handed an early Christmas gift with the possible departure of his soon-to-be retiring Treasury Secretary Timothy Geithner.  While Geithner was connected to Goldman Sach’s former President and Treasury Secretary Hank Paulson, his selection was anything but seamless.  Paulson handed the baton in 2009 to his bureaucrat understudy, without any academic background in economics.  Tim’s undergraduate and graduate degrees were in international relations.  His rocky confirmation 2009 hearings revealed he knew nothing about the IRS, certainly not how to report income 1099 consulting fees.  Whether or not he feigned ignorance, he certainly hasn’t given much confidence to financial markets, still recovering from the worst recession since the Great Depression, handed to Obama by former President George W. Bush.

            Geither’s exit would give Wall Street a shot in arm, since the treasury secretary commands little confidence.  Despite stints at the Council on Foreign Relations, International Monetary Fund and President of New York Federal Reserve Board, Geithner had no formal economics training.   He’s served as a lightening rod for the administrations tone deafness on economics.  Contrary to popular opinion, replacing Geithner would be welcome relief for Obama, still trying to reassure voters that he can handle the economy.  “I think we’re not fully out of the financial crisis yet, and so for that reason you want someone at Treasury who is fully conversant with all the crisis issues,” said William Cline, Senior Fellow at the Peterson Institute, urging a consummate professional for Geithner’s replacement.  JP Morgan Chase CEO Jamie Dimon has appeared on the radar scrren.

             Chief Economist for Moody’s Analytics Mark Zandi believes Dimon is the right man to replace Geithner.  Currently President and CEO of JP Morgan Chase, Dimon came up the ranks at American Express under the ultimate wheeler-Dealer Sanford Weil, who’s responsible for building Shearson Brokerage, American Express and Citygroup over the years.  “The person can’t have a blackened soul from Wall Street’s sins, but also can’t be a Democratic-hack,” said Larry Sabato, director of the University of Virginia’s Center for Public Policy.  Unlike Weil, who has blood on his hands from many failed financial dealings, Dimon seems to have kept his nose clean, despite taking $25 billion in TARP funds from Paulson during the height of the financial crisis in 2009.  Geither’s departure would most likely occur after he negotiates raising the nation’s $14.3 trillion debt ceiling in August.

              With the White House engaged in a pitched battle with Capitol Hill Republicans on slashing the budget, there’s no room for error on his next pick.  “He may want to pick a Republican, a Bob Gates sort of person,” said Sabato, referring to former Bush Defense Secretary who stayed on with Obama.  New York Major and Bloomberg founder Michael Bloomberg also serves as a possible picks.  Nether Dimon nor Bloomberg have expressed any interest in the Treasury Secretary job.  Whoever Barack picks, they’ll have to be an insider with solid academic credentials, capable to dealing with Wall Street’s culture.  When former President Bill Clinton tapped Goldman Sachs CEO to run the Treasury Dept. in 1995, the nation experienced one of the biggest bull markets in U.S. history.  Coming for Harvard College, Harvard Law and London School of Economics, Rubin had all the right stuff.

            Picking either Bloomberg or Dimon would give Obama a real boost heading into next year’s presidential elections.  With the economy Barack’s Achille Heel, his choice of a new Treasury Secretary is critical.  While Geithner refuses to say whether he’ll leave the Obama administration, his family’s move to New York suggests strongly he’s on the way out.  “It give Republicans opportunity to lambaste the record of the Obama adminstration and have a national stage for a debate on jobs and the economy,” said Washington Exchange Analyst Ethan Siegal.  Siegal doesn’t get that with Geithner at the wheel, there’s far more criticism than finding a better replacement.  Getting rid of Geithner offers Obama the best chance to reassure voters that he’s taking the economy seriously.  Geithner’s continued presence reminds voters that the Treasury is run without strong economic credentials.

            President Obama has a golden opportunity to help reassure voters that he’s a good steward of the economy.  Getting rid of Geithner helps the White House by bringing in fresh face with strong credentials and renewed optimism.  Since his awkward confirmation hearings, Geithner got off on the wrong foot when the economy needed urgent CPR.  “I’m not sure how many Republican candidates for Treasury Secretary you’re got to find who’d be willing to make the case the some tax increases are necessary,” said Cline, forgetting that 85-year-old former Fed Chairman Alan Greespan might also be persuaded to come out of mothballs.  While controversial, Greenspan still remains one the world’s most respected economists.  When he speaks, people listen.   Getting someone of that stature could help Barack answer his critics and pave his way to reelection next year.

John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.

©1999-2005 Discobolos Consulting Services, Inc.
(310) 204-8300
All Rights Reserved.