Timothy Geithner: Dead Secretary Walking

A few weeks ago on OTB Radio, Dave Schuler predicted that Timothy Geithner would be out as Treasury Secretary by the end of the year.  At the rate he’s going, he might not last to summer.

It’s bad enough his every public appearance causes the Dow to plummet.  Now, he’s been openly contradicted by his boss on the AIG creating what NYT correspondent Jackie Calmes has dubbed “perhaps the worst week in a string of bad weeks for the Treasury secretary.”

Mr. Geithner’s once-heralded credentials with Wall Street were already marred by false starts in revamping the Bush administration’s bank rescue program, even as his perceived closeness to financiers — he is the former president of the Federal Reserve Bank of New York — and unease with populist politics left Main Street skeptical.

On Wednesday, a junior Republican in Congress and some traders on Wall Street went so far as to call for him to quit or be fired. The Republican leader of the House, Representative John A. Boehner of Ohio, told a conservative talk-radio host that the secretary is “on thin ice.”

But Mr. Geithner’s boss, the president, interjected a vote of “complete confidence.”

Which is Washington speak for “I haven’t fired him yet.”

And, it turns out, Treasury knew about the AIG bonuses days earlier than we’d been led to believe (albeit not nearly as long as the Fed knew.)

Already, Politico has a “Can Geithner Bounce Back?” story.

If Geithner is to survive, Democrats, analysts and even experts in crisis public relations say the Obama White House must find some way to improve the public image of a man who is becoming closely identified in the public mind with the ugly side of the Wall Street bailouts, including the controversy over AIG’s use of taxpayer money to pay $165 million in bonuses to top executives.

Put it this way: Obama’s made clear he’s not getting rid of Geithner. Now he needs a game plan for an urgent rehabilitation — which imagemeisters say will likely mean throwing Geithner a life raft by keeping him out of the limelight, giving him a more aggressive policy stance to sell and even filling out his depleted ranks at Treasury.

The problem is that there’s nothing in Obama’s short history in public life to indicate that he’s willing to spend that much energy — indeed, any energy at all — to prop up an associate who’s creating a distraction. Jeremiah Wrightgone.   Samantha Power — gone. (That one happened so fast it didn’t merit a second post. She is, to be fair, quietly back.) Jim Johnson — goneBill Richardsongone. Nancy Killefergone. Tom Daschlegone. Rodgin Cohen, Chas Freeman, and Annette Nazareth — gone.

Indeed, the only notably exception was Geithner and the flap over his failure to pay taxes. But that’s not a storm he had to weather long and it was obvious that Geithner would nonetheless be easily confirmed under the circumstances.  If Geithner continues to be an obstacle to Obama’s agenda, he’ll soon be — gone.

Photo: Reuters Pictures

Update (Steve Verdon): I think this part is important,

And, it turns out, Treasury knew about the AIG bonuses days earlier than we’d been led to believe (albeit not nearly as long as the Fed knew.)

Lets not forget where Secretary Geithner came from: The Federal Reserve. Further, as head of the New York Federal Reserve he was likely very involved in the AIG matter. The idea that he was caught flat footed on this strains credulity to the breaking point, for me at least. Geithner has been involved in all of these bailouts for months. His work spans both the Obama Administration and the Bush Administration, and he was picked by President Obama. The idea that this can all be blamed on Bush is just not believable either. I think that if Geithner makes it to August it will be surprising at this point.

Oh, can anyone check the In-Trade contract on Geithner’s demise as Secretary of Treasury and post it in comments?

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James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Pete Burgess says:

    A very sad spectacle, indeed. How can one stay optimistic when you add incompetent Chicago politicians to the sordid mix of congressional blowhards.




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  2. Bithead says:

    If Geithner continues to be an obstacle to Obama’s agenda, he’ll soon be — gone.

    Getting rather crowded under that bus, ain’t it?

    It’s my view the one thing keeping Geithner in a job is that Obama doesn’t have an answer to the quetion of Geithner being tossed to the wolves being enough to sate their anger/hunger. I tend to think it will not… the anger brewing out there is a bit larger than one scapegoat will pay for.

    That said, one rather wonders, if Geithner will soon be held accountable for being a tax cheat, after all.




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  3. Zelsdorf Ragshaft III says:

    I am reminded of the movie version of “A Tale of Two Cities”, where the old French woman (Madame DeFarge) sits knitting while calling out the name Guillotine. I wonder if they will call it Gitmo day rather than Bastille day?




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  4. odograph says:

    If you want to play this one, you can get over to InTrade. I understand they’ve set up a betting line.




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  5. Michael says:

    That said, one rather wonders, if Geithner will soon be held accountable for being a tax cheat, after all.

    I believe he already has been made to repay all taxes owed plus penalties.




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  6. sam says:

    The problem is that there’s nothing in Obama’s short history in public life to indicate that he’s willing to spend that much energy — indeed, any energy at all — to prop up an associate who’s creating a distraction.

    I’d think his willingness to jettison such people, and absorb the criticism and move on, would count as a plus. In this, and I know how this grates, he resembles Lincoln, who would throw you out in a heartbeat if he thought you were impeding him. I can’t imagine an Alberto Gonzalez hanging around month after month in the Obama administration.




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  7. JKB says:

    Obama is stuck. Who do they have that could take over? It’s not like they’ve filled the lower Treasury positions. Can the economy survive with Treasury in perpetual limbo like Commerce?

    Just to fuel the incompetent/evil genius themes, are we sure Geithner isn’t trying to get fired. Perhaps he sees no upside in being the whipping boy for a President whose policies keep making the markets skittish.




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  8. PD Shaw says:

    This shows a lack of management skill on the part of Obama. Given the size of the bonuses in the context of the macro economic issues, the G20 summit, etc., you defer to the judgment of the people you trust. Obama should have worried more about appointing the rest of his cabinet and treasury positions than second-guessing his beleaguered Treasury Secretary.




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  9. Dave Schuler says:

    Obama is stuck. Who do they have that could take over?

    My suggestion would be Rahm Emanuel. He’s got the experience, e.g. his time at Wasserstein Perella and his stint on the board of Freddie Mac.

    But more importantly he’s got the temperament for the current circumstances.




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  10. Phil Smith says:

    I’d think his willingness to jettison such people, and absorb the criticism and move on, would count as a plus.

    I agree with you – up to a point. After that point, any honest observer has to begin asking why he’s nominating so many people that end up being jettisoned. I’m past that point; your tolerance levels may differ, but surely you can agree that you will reach it eventually if this continues?




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  11. PD Shaw says:

    As I see it, if Geithner had ordered AIG not to pay the bonuses Friday and word got out that Geithner’s actions had made AIG liable to pay double the bonuses, plus any attorney fees, we would still have “Dead Secretary Walking.”




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  12. Michael says:

    Is singling out a specific group of people for additional taxation even legal? I mean, presumably it wouldn’t be legal to create a 90% tax on bonuses to black people.




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  13. One question I increasingly find myself is why anyone in their right mind would want to be Treasury Secretary.

    In both the current and previous administration, the basic pattern was that the Treasury Secretary had no actual control over policy, they were just given blatantly impossible objectives by the President and Congress and told to somehow magically make them work. When the policy inevitably proved a disaster, it would then be blamed on the Treasury Secretary.

    This cycle would repeat until their reputation had been completely destroyed at which point they’d be thrown out and a new chump would be chosen.




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  14. Steve Verdon says:

    I’m now convinced that Geithner’s supposed genius was mostly hype. The man is a walking debacle. He was involved in TARP 1.0, his taxes, now he knew about the bonuses before they became public knowledge, and I’d be willing to bet that this issue came across his desk in New York back when he was head of the NY Fed Bank. I don’t think it is too unfair to say he is part of the problem.

    Getting rather crowded under that bus, ain’t it?

    Obama came up through Illinois politics which is known for this kind of thing. Not surprising really. What I find amazing is how so many people can still act like sycophantic lickspittles for President Obama.

    I’d think his willingness to jettison such people, and absorb the criticism and move on, would count as a plus.

    Except for the fact that President Obama keeps picking these people.

    Obama is stuck. Who do they have that could take over? It’s not like they’ve filled the lower Treasury positions. Can the economy survive with Treasury in perpetual limbo like Commerce?

    It might actually be an improvement. Everytime Geithner shows any part of his anatomy in public the stock market drops like a rock. Usually it is to explain yet another boner. Maybe just parking an empty chair in the Treasury would make things better not worse.

    My suggestion would be Rahm Emanuel. He’s got the experience, e.g. his time at Wasserstein Perella and his stint on the board of Freddie Mac.

    Oh yeah, that last one is a huge plus. Much better than Golden Geithner. Please.

    Is singling out a specific group of people for additional taxation even legal? I mean, presumably it wouldn’t be legal to create a 90% tax on bonuses to black people.

    Might be after Congress and Obama get done with this. But hey, he’s the Obamassiah, no need to worry.

    This cycle would repeat until their reputation had been completely destroyed at which point they’d be thrown out and a new chump would be chosen.

    So, do you think having an empty chair might be the best solution? Seems like you’d agree, so I’m curious.




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  15. PD Shaw says:

    One question I increasingly find myself is why anyone in their right mind would want to be Treasury Secretary.

    I’m wondering why Edward Liddy would want to come out of retirement to work for an annual salary of $1 to get heckled by self-righteous demagogues.




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  16. Bithead says:

    Is singling out a specific group of people for additional taxation even legal?

    Article 1 Section 9

    No Bill of Attainder or ex post facto Law shall be passed.

    Article 1 Section 10

    No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

    Guess the answer is ‘no’.




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  17. sam says:

    I’m past that point; your tolerance levels may differ, but surely you can agree that you will reach it eventually if this continues?

    I surely will agree with you.




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  18. Phil Smith says:

    I surely will agree with you.

    Great!

    When?




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  19. markm says:

    And, it turns out, Treasury knew about the AIG bonuses days earlier than we’d been led to believe (albeit not nearly as long as the Fed knew.

    The idea that he was caught flat footed on this strains credulity to the breaking point

    Well, we now know that Dodd was pressured into adding this amendment by the Treasury (says Dodd…today…as well as an un-named “source”) so isn’t it conclusive Geithner knew???….or at least someone high-up at the treasury knew???. I mean, why put that in with that date if you didn’t know bonuses were coming down the pike???.

    I’m more curious about all that bailout money that was funneled overseas. I’ve seen only one or two stories on it.




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  20. Michael says:

    Article 1 Section 9

    Article 1 Section 10

    I’m not sure those are the most relevant parts of the constitution here, though there is the case to be made that Congress can’t add new taxes to incomes received under the old tax code, but I’m not sure about the precedent on that.

    I was more thinking about how specifically targeted this tax is to a group of people, simply for being politically out of favor. It will make for a very interesting SCOTUS case, if they want to push it that far.




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  21. Steve Verdon says:

    I was more thinking about how specifically targeted this tax is to a group of people, simply for being politically out of favor. It will make for a very interesting SCOTUS case, if they want to push it that far.

    I suppose interesting is one word for it. Terrifying is another. Think about it, your preferred party isn’t always going to be in power. And using these kinds of punitive taxes is a great way to such up the opposition. No longer will it just be the IRS auditing you, now you’ll also get your own special “pain in the ass” tax.

    But what the Hell people are pissed so lets just stone a few people to death in the public square to appease the angry God of the Economy.




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  22. Bithead says:

    I’m not sure those are the most relevant parts of the constitution here, though there is the case to be made that Congress can’t add new taxes to incomes received under the old tax code, but I’m not sure about the precedent on that.

    Perhaps not directly to your point, but to the situation, this grab by Congress would certainly qualify as ex post facto law.




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  23. So, do you think having an empty chair might be the best solution? Seems like you’d agree, so I’m curious.

    It wouldn’t be the best solution for the country, but it would probably be the best solution for any potential treasury secretary candidates.




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  24. sam says:

    Great!

    When?

    When I reach the point (whenever that is) 🙂




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  25. Donna Baldwin says:

    This congress is a disgrace! There is no end to this insanity! The PRESIDENT DOES NOT CARE!!!!! We must save this country! Thanks to you idiots who voted for OBAMA! Where is the TRANSPARENCY other than the fact we see through his agenda in spite of!




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  26. Olliander says:

    I’m more curious about all that bailout money that was funneled overseas. I’ve seen only one or two stories on it.

    Yes. The contracts that AIG paid out 100% on transactions that were underwater. Amusing.

    Bonus-gate was merely a distraction. The REAL looters (politicians) are trying to project some faux populist angst against the traders over at AIG for bonuses that, as James noted, are a minimal portion of the total bonus money they’ve received.

    Amazing how these things turn out.




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