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Banking Sector, Bailout Reform May Top Obama Economic Agenda

Treasury nominee Timothy Geithner went before a Senate panel Wednesday, answering questions on the financial crisis as well as his tax payment controversy. Analysts mull what's ahead for Obama's economic agenda.

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  • JIM LEHRER:

    While the president devoted much attention to the economy on this important first day, there was also the business of a confirmation hearing for his treasury secretary nominee, Timothy Geithner. Our economics correspondent Paul Solman has that story.

    PAUL SOLMAN, NewsHour economics correspondent: Treasury Secretary-designate Timothy Geithner appeared before the Senate Finance Committee a day after President Obama took the Oath of Office amid what he called "gathering clouds and raging storms."

    Indeed, signs of yet more economic trouble now loom, such as steeper losses at banks Geithner regulated.

    The nominee has also been under a storm cloud himself, after news surfaced last week of his failure to pay Social Security taxes between 2001 and 2004 when working at the International Monetary Fund.

    But Geithner's opening statement emphasized the big picture.

    TIMOTHY GEITHNER, Treasury secretary-designate: We now confront extraordinary challenges: a severe recession here and around the world; a catastrophic loss of trust and confidence in our financial system; unprecedented foreclosure rates; small businesses struggling to stay afloat; millions of Americans worried about losing their jobs and their savings; a deep uncertainty about what tomorrow holds.

    Senators, the ultimate costs of this crisis will be greater if we do not act with sufficient strength now. In a crisis of this magnitude, the most prudent course is the most forceful course.

  • PAUL SOLMAN:

    Geithner said the new administration would soon release details of that course. He closed his open with the tax issue, no small matter since the IRS reports to the treasury secretary.

  • TIMOTHY GEITHNER:

    These were careless mistakes. They were avoidable mistakes, but they were unintentional. I should have been more careful. I take full responsibility for them. I have gone back and corrected these errors and paid what I owed.

    I want to apologize to the committee for putting you in the position of having to spend so much time on these issues when there is so much pressing business before the country.

  • PAUL SOLMAN:

    After an audit and advice from a tax preparer, Geithner, who said he'd used TurboTax software to prepare his own return, paid what the IRS said he owed, but not for the first two years, which were outside the statute of limitations. "An honest mistake," he said.

    But that failed to placate Republican Jon Kyl of Arizona.

  • SEN. JON KYL, R-Ariz.:

    Yes, I'm sorry to take extra time here, but would you answer my question rather than dancing around it, please? The question is whether it occurred to you, before you were nominated or before you were approached to be nominated, that, in point of fact, you didn't have to go beyond 2003 and 2004 because of the statute of limitations?

  • TIMOTHY GEITHNER:

    I did not think about that until I was going through the vetting process and had disclosed at that point to the transition members reviewing my tax records the entire circumstances surrounding that episode. I had not thought about it in the intervening years, no occasion to think about it, and I might not have thought about it unless I had gone through that process.

    But having thought about it then, I did what I thought was right, which was to go back and correct for that error.