So Timmy the Keebler Elf says he's going to quit. Who should replace him?
Geithner Said to Consider Leaving Treasury After Debt Debate
By Hans Nichols - Jun 30, 2011
Treasury Secretary Timothy F. Geithner has signaled to White House officials that he’s considering leaving the administration after President Barack Obama reaches an agreement with Congress to raise the federal debt limit, according to three people familiar with the matter.
Geithner said speculation about his departure was being driven by his decision to commute to New York so his son can finish his final year of high school there.
“I live for this work,” he said at the Clinton Global Initiative in Chicago. “It’s the only thing I’ve ever done. I believe in it. We have a lot of challenges as a country. I’m going to be doing it for the foreseeable future.”
Geithner hasn’t made a final decision and won’t do so until the debt-ceiling issue has been resolved, according to one of the people. All spoke on condition of anonymity to talk about private discussions.
The Treasury secretary has said the U.S. risks defaulting on its obligations if Congress doesn’t raise the $14.3 trillion debt ceiling by Aug. 2. The administration and Republicans in Congress are at an impasse in negotiations to raise the limit, which is tied to efforts to cut the nation’s long-term deficit.
Moody’s Investors Service said on June 2 that it expects to place the U.S. government’s Aaa credit rating under review for a possible downgrade if there’s no progress on the debt limit by mid-July. Fitch Ratings said June 21 it would place the U.S. on a negative rating watch if no action is taken by Aug. 2.
Completing the Turnover
An exit by Geithner would complete the turnover in Obama’s original economic team, with Council of Economic Advisers Chairman Austan Goolsbee scheduled to leave in early August to return to the University of Chicago.
That would leave Obama with two key posts to fill as Republicans are seeking to turn the 2012 election into a referendum on Obama’s handling of the economy and as the recovery is slowing. The unemployment rate rose to 9.1 percent in May, according to the Labor Department, and the economy grew at a 1.9 percent pace in the first quarter, according to Commerce Department figures released June 24.
Jen Psaki, a White House spokeswoman, declined to comment.
“Geithner leaving may raise the level of uncertainty for the direction of economic policy, and that is never a positive thing for the markets and the recovery,” said Christopher Sullivan, who oversees $1.7 billion as chief investment officer at the United Nations Federal Credit Union in New York.
‘Shock Value’
Still, he said, it wouldn’t have too much “shock value,” especially if Geithner remains at Treasury until the debt ceiling is settled, “which is the most pressing concern anyone would have.”
Treasuries fell for a fourth day as stocks rose and a measure of U.S. business activity improved. The yield on the 10- year note climbed five basis points, or 0.05 percentage point, to 3.16 percent at 5:14 p.m. in New York.
Investors may be more interested in who would come after Geithner.
“The question in cases like this is always who will be the replacement,” said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. “You can’t judge if this is good or bad for the market until you see who follows.”
The market was “comfortable” with Geithner because he was “a visible player in trying to blunt the crisis,” Mueller said.
Needs a Break
Geithner, 49, has told associates he needs a break from government service after dealing with the turmoil that followed the collapse of Wall Street firms, including Bear Stearns Cos. and Lehman Brothers Holdings Inc., first as president of the Federal Reserve Bank of New York and then as Treasury secretary.
If Geithner does leave the administration, Obama would be losing a member of his economic team who understands Washington institutions and the New York banking world as well as the intricacies of the Chinese economy. Geithner has pressed the Chinese to let their currency appreciate faster to reduce the global imbalances that both he and Obama have blamed for financial uncertainty.
After Obama’s victory in the 2008 election, Geithner had a rocky start in Washington as he faced Senate scrutiny over his failure to pay self-employment tax returns while he worked at the International Monetary Fund. He paid some of the taxes after being audited by the Internal Revenue Service and didn’t pay the rest until it was clear that he would be nominated for the Treasury post, according to the Senate Finance Committee.
Growing Stature
His initial moves to return financial markets to health were rebuffed by Wall Street. On Feb. 10, 2009, when Geithner unveiled a plan to bolster the banking system, the Standard & Poor’s 500 stock index tumbled 4.9 percent.
As Obama’s presidency progressed, and the economy began to recovery, Geithner’s stature grew.
“Tim was very influential from day one,” said former CEA Chairman Christina Romer. “His public persona has just caught up with what has always been true inside the White House.”
Former President Bill Clinton said he “honestly didn’t know” whether business confidence might be hurt if Geithner leaves.
“I think what people want is predictability now,” Clinton said in an interview with Bloomberg Television today in Chicago. “We’ve absorbed a lot of change, we’ve absorbed a lot of trauma.”
Clinton, who called Geithner “a very smart man,” said he hadn’t heard that the Treasury secretary was considering leaving.
Summers, Orszag
In addition to Goolsbee, who earlier this month announced his decision to return to the University of Chicago, three other top Obama economic advisers already have departed. At the CEA, Goolsbee replaced Romer, who returned to teaching at the University of California at Berkeley last September.
National Economic Council Director Lawrence Summers and Office of Management and Budget Director Peter Orszag left the administration last year. Summers returned to Harvard University, and Orszag is now vice chairman of global banking at Citigroup Inc.
Geithner earned a bachelor’s degree from Dartmouth College in Hanover, New Hampshire, and a master’s degree from Johns Hopkins University’s School of Advanced International Studies in Washington. After graduate school, he worked for three years at a global consulting firm founded by Henry A. Kissinger.
Some Republicans are already urging Obama to select a replacement who comes from the business community.
“What would be smart is to bring a CEO on board,” Senator Rob Portman of Ohio said on Bloomberg Television. “Somebody who’s got business experience. Somebody who, again, understands the important connection between policies and jobs and the economy and the fiscal situation.”
Link
Reply With Quote
Originally Posted by kwame k
