the greatest depression

The Humiliations of Tim Geithner

Poor Tim Geithner. The Former New York Fed president’s stint as Treasury secretary has, to put it mildly, not been going very well. In retrospect, it seems like it was cursed from the beginning, when his nomination was briefly put on hold after it was revealed he owed $32,000 in back taxes. He made it through the ensuing Senate gauntlet and become Treasury secretary, but that wasn’t much of a reward, what with the country in the midst of the worst economic downturn since the Great Depression; the banking, insurance, housing and auto industries all in arrears; and the public becoming deeply mistrustful of basically everyone and everything.

To make it worse, he’s been “sitting there alone,” as Obama adviser Paul Volcker put it last week. Because of Geithner’s own awkward nomination setback, and this administration’s strict appointment policies in general, the White House is behind on hiring and key positions in the Treasury have gone unfilled. Last week, a potential deputy Treasury secretary, Annette Nazareth, was dropped because of her experience working at the SEC, an organization that, in light of the Bernie Madoff and related scandals, looks like less of an incubator for genius financial minds than your local Hooters. “It’s shameful,” Volcker said of the staffing difficulties.

Because he is alone, and things are so bad, Geithner has become the face of the financial crisis — and, in a lot of ways, its newest scapegoat.

In part, he’s brought it upon himself. Geithner’s first public outing was a press conference in which he appeared, looking like a terrified spaniel, and presented a plan to buy up $1 trillion in toxic assets from the nation’s banks. The plan was immediately derided as being way too short on details. Subsequent, similarly vague iterations of the same plan, and the administration’s decision to hold back on certain details, have only made his critics more virulent. Last week, as the employment rates plummeted along with the Dow, frustration with the Treasury secretary and the administration’s inaction seemed to hit a fever pitch — and much of the anger was focused on Geithner.

Paul Krugman wrote that Geither has been underestimating the crisis and that his plan, such as it is, “isn’t going to fly.”

[O]fficials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable. But this refusal to face the facts means, in practice, an absence of action.

Henry Blodget at Silicon Alley Insider took it one step further: He said Geithner should be immediately fired:

The engines of the US economy just quit. We’re losing altitude rapidly. And the co-pilot flying the plane clearly doesn’t know what to do. So it’s time for the captain to take over again, before Geithner takes him and the rest of us down with him.

Chris Whalen, the director of Institutional Analytics, predicted Geithner would be “gone by June.” Sunday morning on Fox, John McCain basically accused him of being a wimp who can’t make “hard decisions.” Even Saturday Night Live made fun of his haplessness this weekend, with a sketch that had him offering cash to anyone who called an 800 number with ideas to fix the economy.

It’s doubtful that the Obama administration would actually fire Geithner, since this would only make them look even more like they don’t know what they’re doing. “We have tremendous confidence in Secretary Geithner,” the White House press secretary reiterated at a news conference last week. And this weekend, the White House took steps to quell the criticism of Treasury’s understaffing. Yesterday, the administration finally announced three nominees for top Treasury positions: Princeton professor Alan B. Krueger for assistant secretary for economic policy; Davis S. Cohen, for assistant secretary in the office of terrorism and financial intelligence; and Kim N. Wallace for assistant secretary for legislative affairs.

It’s doubtful this will do much to take the heat off Geithner, though, who has a long, hard road ahead of him. Also, he still doesn’t have a deputy Treasury secretary, or one for international policy and domestic finance. We can already imagine next week’s Saturday Night Live sketch: maybe he’ll advertise for them on Craigslist?

Geithner Goes Against Economic Current, Bereft of Paddles [NYT]
Tim Geithner — He’s Hiring! And His Critics Hope It’s Soon [Time]

The Humiliations of Tim Geithner