Obama: I won't let Treasury Secretary quit his job

President seeks to end criticism of aide at centre of row over Wall Street bonuses
Click to follow
The Independent US

Barack Obama tried to silence critics of Timothy Geithner last night, issuing yet another public endorsement of his Treasury Secretary as the pair put the finishing touches to their latest plan to dig the US economy out of recession.

The President used an interview on the current affairs programme 60 Minutes to insist that even if Mr Geithner were to tender his resignation, his answer would be: "Sorry buddy, you've still got the job."

The two men spent yesterday at Camp David, nailing the details of the banking bailout they are set to unveil today. The plan is to earmark $100bn to help move toxic assets off the books of endangered ledners and, in doing so, unfreeze the credit markets.

"It's going to take a little bit more time than we would like to make sure we get this plan just right," Mr Obama said. "Of course, then we'd still be subject to criticism. What's taken so long? You've been in office a whole 40 days and you haven't solved the greatest financial crisis since the Great Depression."

Richard Shelby, the top Republican on the Senate banking committee, said Mr Obama's show of support did not make him feel "especially good" about the Treasury or the man at its helm. "My confidence is waning every day," Mr Shelby told Fox News. "If he keeps going down this road, I think he won't last long. He'll have to have at least a 180-degree turnaround, I believe, to be a successful Treasury Secretary."

Mr Geithner's credibility was dented from the day he started the job after 34 senators voted against his confirmation following the revelation that he had underpaid his taxes. Now, as the financial crisis delivers one sucker punch after another, the Treasury Secretary's name rarely appears in print without the adjective "embattled".

In one widely quoted quip, the HBO talk-show host Bill Maher declared: "If President Obama really wants to be transparent and level with the American people, he must replace Treasury Secretary Timothy Geithner with an actual deer caught in headlights."

Mr Geithner, though widely considered to be a brilliant financial strategist and policy adviser, has struggled to strike a chord with the public. During last week's furore over the insurance giant AIG using taxpayers' money to pay exorbitant bonuses to executives, he was repeatedly accused of seeming aloof. The White House will be keen to avoid the kind of stock market dive that greeted Mr Geithner's original discussion of the bailout plan last month. The Dow Jones index plunged by 380 points on 10 February, with investors disappointed with the lack of specifics.

Christina Romer, the head of Mr Obama's White House council of economic advisers, toured television studios at the weekend to trumpet the scheme. The government is expected to offer about $100bn of low-interest loans to private investors who agree to buy up as much as $1 trillion of toxic assets from vulnerable banks. "We absolutely think this will do the job for the American economy," Ms Romer said, adding that the administration was "incredibly confident" that the economy would "bottom out this year and actually be growing again by the end of the year".

But it is set to be another difficult week for Mr Obama's team. The fury over AIG's bonuses continues to rage, stoked by revelations at the weekend that the insurer paid out far more than was first thought. When the amount in question was $165m, the wave of public anger was immense, but now the bonus mountain has hit $218m, almost a third more than expected. Mr Geithner is due to testify about AIG on Tuesday to a Congress keen to know exactly when he and the Federal Reserve Chairman, Ben Bernanke, knew what. While there have been a handful of direct calls – including from a Republican Representative from Florida, Cornelius Harvey McGillicuddy IV (Connie Mack) – for the Treasury Secretary to fall on his sword, few analysts expect him to leave, particularly given the lack of obvious alternatives.

The President will do his bit to try to restore public confidence in his administration's handling of the economic crisis, with a prime-time press conference tomorrow night. But once-loyal commentators are beginning to subject Mr Obama's economic policy to close scrutiny.

An editorial in yesterday's Washington Post said: "Until now he has offered a host of new spending – on healthcare, middle-class tax cuts, education and alternative energy – without calling for much sacrifice from anyone except the top 5 per cent of the income scale."