David Prosser: Geithner is fast running out of time and excuses
Monday 23 March 2009
How did it go so wrong so quickly for Timothy Geithner, facing calls to resign just a few months after President Barack Obama won near-universal acclaim for appointing him US Treasury Secretary? Mr Geithner is failing both politically and strategically. It became painfully obvious last week that the Treasury had not foreseen how explosive the bonus scandal at AIG would become.
It is still not clear exactly what Mr Geithner knew about the bonuses the failed insurance giant had agreed to pay staff, but this was not a problem he simply inherited. As president of the New York Federal Reserve before joining the administration, he was closely involved with the bailout of AIG; he had no excuse for not knowing about the bonuses and not questioning them. That lack of foresight, when combined with the Treasury's initial reluctance to demand AIG tackle its greedy executives head-on, has handed President Obama's administration its biggest headache so far. But it is not this lack of political nous that most worries the world's financial community: it is more concerned about Mr Geithner's ability to deal with the banking crisis.
On arrival in office, he made it clear he would reconsider the plans of his predecessor, Hank Paulson, to deal with the toxic assets inhibiting the willingness of US banks to lend to consumers and businesses. But when he presented his alternative ideas last month, stock markets around the globe fell sharply, so vague was the vision.
More detailed plans will be unveiled this week, but Mr Geithner's proposal for the state to buy up those horrid mortgage-backed securities has already prompted a storm of criticism. Paul Krugman, the Nobel prize-winning economist, calls it an "awful mess".
One problem, not of the boss's making, is that many posts at the Treasury remain unfilled, with senior appointments mired in a vetting process that has become interminable since the government was spooked by the embarrassing revelations about the tax arrears of its putative health secretary.
Even if the Treasury were fully staffed, it would be ludicrous to expect it to have solved the biggest financial crisis for 80 years in the time Mr Geithner has had. Unless he works out how to put out political fires such as AIG, and come up with a more credible route-map out of the financial crisis, he is not going to get much longer.
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 3 Parma, Missouri: 80 per cent of town's police quit after first black mayor is elected
- 5 Google search history can now be downloaded in its entirety, mass embarrassment expected
Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
Katie Hopkins and The Sun editor David Dinsmore reported to police for incitement to racial hatred following migrant boat column
'Jihadi John': Isis executioner Mohammed Emwazi wanted to wage jihad in Somalia until his friends were betrayed and killed by al-Shabaab
Parma, Missouri: 80 per cent of town's police quit after first black mayor is elected
Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...