Senate confirms Geithner for Treasury chief
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The US Senate approved the nomination of 47-year-old Timothy Geithner as Treasury secretary by a 60-34 vote. A former New York Fed chairman was the "very best of a very short list of candidates" to tackle the US slowdown, observers said.
REUTERS - The crumbling U.S. economy put a premium on a unique quality that Timothy Geithner brought to his candidacy for Treasury secretary -- he has been involved in every major action in the past year to try to prop it up.
As banks queued up for bailout money, all Wall Street investment banks were taken over or converted to commercial banks and housing sank steadily, Geithner's job as president of the New York Federal Reserve Bank put him at the forefront of rescue bids that continue in full flood with no end in sight.
Geithner was approved by a 60-34 vote by the U.S. Senate late on Monday, putting the 47-year-old in charge of a Treasury Department at the forefront of efforts to restore U.S. stability.
"It's a tough job and I think Geithner has been intimately involved in every detail of the economic rescue effort," said Robert MacIntosh of Eaton Vance Corp in Boston who expects the U.S. economy to contract throughout 2009.
That, plus a feeling that time is of the essence in getting the new administration's crisis team together, seemed to overcome Republicans' criticisms that Geithner's failure to pay some taxes in a timely fashion stained his record.
Since the credit crisis burst into view in August 2007, Geithner has played a large role in efforts by the Federal Reserve and Treasury Department to settle financial markets.
So far, however, policy-makers have not restored confidence in financial markets, though they are credited with warding off a more-severe outcome, and Geithner is seen as specially well-positioned to improve the response.
"He's been involved in this financial crisis as a policy-maker for a long time and it's hard to believe that he hasn't gained experience that will be valuable and useful," said Douglas Lee, president of Potomac, Maryland-based firm Economics from Washington.
Geithner's New York Fed post made him the U.S. central bank's man on Wall Street and put him at Fed Chairman Ben Bernanke's side throughout the rapid-fire creation of financing mechanisms aimed at bucking up the financial system.
He also worked in lock-step with former Treasury Secretary Henry Paulson on gauging the problems and shaping the responses to the woes surrounding firms from Lehman Brothers Holdings to American International Group and Citicorp.
In addition, as the head of the New York Fed, Geithner served as vice chairman of the Fed's interest-rate setting panel, which has pushed benchmark overnight rates to virtually zero in an effort to combat the deepening U.S. recession.
"We have a long way to go yet," said MacIntosh of Eaton Vance Corp. "But there is some anecdotal evidence those (efforts) are starting to have some traction in dealing with the problems even though it's going to be a very frustrating exercise."
An issue already shaping up for Geithner is how to handle relations with Asian export powerhouse China, which has bristled over allegations by President Barack Obama while campaigning that Beijing manipulated its currency's value.
Geithner made a similar suggestion during a Senate hearing last week that White House officials played down on Monday by saying he was only repeating Obama's remarks.
The issue of whether China keeps its yuan currency unfairly low to gain a trade advantage was a constant nettle for the former Bush administration and Congress still wants a tough stance to try to protect American jobs where possible.
One factor that helped Geithner win approval was that few other top candidates emerged, especially after one-time Treasury Secretary Lawrence Summers was drafted for a top White House economic advisory job that took him out of contention for a second turn as Treasury chief.
That left Geithner, blemishes and all, as nearly the last man standing to soothe queasy financial market participants, who noted that at least he should be able to track where hundreds of billions of tax dollars have gone.
"He's the very best of a very short list of candidates to become Treasury secretary. At this critical juncture, you want somebody who has implemented a lot of these programs that they've come up with," said Chris Rupkey, chief financial economist at Bank of Tokyo/Mitsubishi UFJ in New York.
"He knows where all the money has been lent, works well with Fed Chairman Ben Bernanke and still has the confidence of the markets," Rupkey added.
Geithner's has five years' experience heading the New York Fed and comes to the Treasury with a very different background from Paulson, a high-flying former Goldman Sachs chief before he took over the Treasury in 2006.
Some analysts expressed misgiving about the Fed as a training-field for the more politically oriented Treasury.
"I think he's a good candidate, but I would be a little bit cautious that with the ex-president of the New York Fed now in charge of the Treasury, the Fed may be gaining too much control," said Tom Sowanick, chief investment officer for Clearbrook Financial LLC in Princeton, New Jersey. "I would expect him to create more of a Fed imprint on the system."
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