President-Elect Obama Expected To Go With Federal Reserve Bank of New York President Timothy Geithner
Friday, November 21, 2008SUSIE GHARIB: It appears President-Elect Barack Obama has chosen a Treasury secretary. Reports late this afternoon say he's Timothy Geithner, a top leader at the Federal Reserve and president of the Federal Reserve Bank of New York. Wall Street applauded the nomination. The Dow skyrocketed nearly 500 points. Joining us now with more, Washington bureau chief Darren Gersh. Hi Darren.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hey, Susie. When I talk to people about Geithner they use terms like all-star and they say people should sleep more soundly with him at Treasury. He earned that reputation as a key architect of the Federal Reserve's financial rescue plan and its point person to Wall Street. It's important to point out that this is also not Geithner's first crisis. He rose up through the Treasury in the Clinton years and his job was to handle tough negotiations during the Asian financial crisis. So in this sense, former Federal Reserve Governor Larry Meyers tells me there is no learning curve for Geithner. Now last March, Geithner was the one who helped engineer the bail out of Bear Stearns and he's ben an active player in decisions involving Lehman Brothers and AIG, so his nomination would put someone who has helped manage this crisis at the center of the Obama economic team. Perhaps most importantly, Geithner is considered pragmatic and willing to consider new ideas. I talked to Jared Bernstein, an economist who has worked with the Obama team and he adds that Geithner is close, but not too close to Wall Street.
JARED BERNSTEIN, SR. ECONOMIST, ECONOMIC POLICY INSTITUTE: He's been an international player. He's a person who's been on Wall Street with great knowledge of Wall Street banking, but not of Wall Street, never a Wall Street banker himself. In fact, his career has been exclusively in the public sector, the Federal Reserve, the Treasury, by the way, many appointments at Treasury before. So this is a guy who knows how things work public and private sector.
GERSH: Now, this is very interesting. There are also reports that Larry Summers, the former Treasury secretary under Clinton could be named an economic adviser to Obama and that would put him in position to be a possible successor to Federal Reserve Chairman Ben Bernanke when his term is up. So that's significant, because Geithner worked under Summers at the Clinton Treasury. Now we could know all this as soon as Monday. That's when it's expected that Obama will make an official announcement of his economic team, Susie. And Susie, I understand you know Geithner pretty well. What do you think?
GHARIB: You're right. I know Tim through our association of the Economic Club of New York. We're both trustees. My sense of him is he is very smart. He's also thoughtful. He's a good listener and he's humble. He's got this kind of honest humility about himself. He doesn't think--
GERSH: Very diplomatic.
GHARIB: .. he has all the answers. He is very diplomatic. But Darren, I'm wondering from the sources that you have been talking to, are there any criticisms about Geithner as Treasury secretary?
GERSH: I would say there are sort of two possible knocks, kind of criticisms, if you will. One is that he has been involved in this crisis from the get-go. So there could be questions about how much he has ownership over it. I think the second one is a little more subtle. He's known as a very brilliant team player, quite frankly, but he hasn't necessarily made his reputation as the idea man, the person who leads the ideas forward. That was Larry Summers and if Larry Summers is at the White House, you could have a question of whether there's kind of a shadow Treasury secretary out there.
GHARIB: That's very interesting. Now, what comparisons have you heard of what Geithner would be like as Treasury secretary compared to Hank Paulson?
GERSH: Much more pragmatic, none of the ideological baggage, more activist, more willing to use the government funds to fix markets.
GHARIB: All right. I guess we'll find out on Monday what happens. Thanks a lot, Darren.
GERSH: Thanks Susie.
GHARIB: Darren Gersh, Washington bureau chief.
