President-Elect Barack Obama has received surprising praise from some conservatives for
his economic team. After running a successful populist campaign against
Wall Street and financiers, Obama has chosen to staff his
administration with centrists, a few of whom championed some of the
very policies of tax cuts and financial deregulation for which Obama's
supporters on the Left castigated Republicans.
indeed deserves praise for most of these choices, such as former
Treasury Secretary Larry Summers and economic historian Christina
Romer, both distinguished Center-Left thinkers.
principled conservatives and liberals should take strong exception to
Obama's selection of Timothy F. Geithner, president of the Federal
Reserve Bank of New York, to be the new Secretary of Treasury.
not a case of Geithner being too liberal; there are choices to the Left
of Geithner that would not be cause for the specific concerns his
nomination raises. Rather, the problem with Geithner is that appointing
him appears to be scarcely different from reappointing Treasury
Secretary Henry Paulson.
Based on his
orchestration of much of this year's financial bailouts in his current
post, Geithner would be "more of the same" of the worst aspects of the
Bush administration — more bailouts, more lack of transparency in the
bailouts, and more corporate welfare.
As head of the New York Fed, Geithner has been, in The Washington Post's
words "a primary architect of the Bush administration's response to the
financial crisis," and "has worked closely with [Paulson]to devise
responses to the most critical events of the market turmoil."
than organizing bailouts, however, Geithner's resume is quite thin
compared to that of others who have held the office for which he has
been nominated. As liberal columnist Robert Kuttner noted recently in The American Prospect, Geithner "has neither a doctorate in economics nor an M.B.A."
Geithner has never been a corporate leader, nor an economics professor
with a trail of published academic papers. Instead, Geithner's career
has been almost entirely in the bowels of the bureaucracy. He started
at the Treasury Department in 1988 as a career civil servant before
being appointed under-secretary of the Treasury for international
affairs in 1999.
Geithner would not have
even been under consideration had he not come to prominence in
circumventing rules to arrange the bailout of Bear Stearns' creditors
earlier this year, with $29 billion in backing from U.S taxpayers.
According to accounts from both conservative columnist Robert Novak and the financial magazine Conde Nast Portfolio, Geithner was the main instigator of the bailout, getting Paulson and Fed Chairman Ben Bernanke to sign on to his handiwork.
Bear deal faced criticism from the Left and Right as both a stretch of
the Fed's power and a precedent that spread "moral hazard," thus
leading to the further bailouts down the line — bailouts that Geithner
would be heavily involved in, working hand-in glove with Paulson.
in addition to the questionable results of bailouts in saving the
economy, also troubling has been the Federal Reserve's lack of openness
when it has put taxpayer money on the line, an area where Geithner
shares much of the blame.
A recent editorial in The Wall Street Journal
noting that "Geithner was the driving force behind the government
takeover of insurance giant AIG" also criticized "the New York Fed's
lack of transparency, both about the nature of the 'systemic risk' that
required the takeover and why it was superior to bankruptcy."
judgment has also been questioned with recent reports of alleged
favoritism toward Citigroup -- the financial firm where Geithner's
mentor, former Treasury Secretary Robert Rubin, serves as a director
and senior counselor.
According to a
Bloomberg News report, Geithner unsuccessfully pushed for Citi to take
over troubled banker Wachovia Corp. with government guarantees of
billions of dollars, even after Wells Fargo & Co. offered to take
over the company at no cost to taxpayers and a higher price for
recent need for a second bailout from the Treasury Department, one can
only imagine the additional troubles for the U.S. financial system had
it been allowed to take over Wachovia as Geithner desired.
that bailouts are just about his only significant policy
accomplishment, confirming Geithner without heavy scrutiny would be
giving the Bush-Paulson bailouts a free pass. And that would be a
blatant dereliction of the Senate's constitutional duty to give
President-Elect Obama its best advice and consent.
John Berlau is director of the Center for Entrepreneurship at the Competitive Enterprise Institute and blogs at OpenMarket.org.
Original text can be viewed here: http://www.dcexaminer.com/opinion/Geithner_is_spelled_P-a-u-l-s-o-n_1218...