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Thread: Barack Obama to tap Tim Geithner as next Treasury Secretary

  1. #1
    Elite Member Belinda's Avatar
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    Default Barack Obama to tap Tim Geithner as next Treasury Secretary

    HuffPost's Sam Stein reports:

    Barack Obama will name his Treasury Secretary on Monday, a Democratic source confirms to the Huffington Post. NBC News and other outlets report that Tim Geithner will get the nod over former Treasury Secretary Larry Summers.

    Geithner is currently the president of the Federal Reserve and once served in the Treasury Department under Summers.

    Part of the reason Obama is making the announcement so soon is the market disarray in recent days. The public roll-out of an economic team could calm those waters.

    Another Democrat, however, told the Huffington Post that there is a growing recognition within the Obama circle that they need to be more assertive in the transition period about their personnel and goals for governance. There is some concern that the economic situation will grow so poor under the remaining months of the Bush administration that Obama will be left with nearly insurmountable economic tasks.

    "Tim Geithner, if he becomes the Treasury Secretary, he is a man of terrific abilities, great experience, and is centrally involved in trying to cope with the economic crisis we have on our hands," said Mickey Kantor, Commerce Secretary under President Clinton. "He is balanced, thoughtful and bright... I think that either [Geithner or Larry Summers] would have been a brilliant choice. You could make the case for either one. I've worked with Larry and I have nothing but the greatest respect for his abilities. This isn't frankly, negative towards Larry at all... The idea that Tim Geithner is in the middle of this crisis means he is more prepared than anyone to deal with what is going on right now... We don't have tie for any kind of wasted motion."

    More details from NBC:
    Geithner has been a key player in the current economic crisis -- helping Treasury Secretary Hank Paulson and his team manage the wall street bailout.
    Former Treasury Secretary Summers -- also considered for the post -- might still play a major future role in the Obama administration, according to sources. Summers came under fire from women's groups because of controversial comments he made about gender issues while President of Harvard, but sources say the decision to choose Geithner had more to do with Obama's interest in "change" and getting someone new on the team.

    Also expected Monday -- an announcement that former U.N. Ambassador and Energy Secretary in the Clinton administration, New Mexico Governor Bill Richardson, will be Commerce Secretary.
    Paul Volcker is expected to play a continuing advisory role -- not clear if he would have an appointed position.

    The New Republic earlier profiled Geithner:
    Indeed, if not for Geithner's periodic assertiveness, the '90s might have looked very different. At Treasury, Geithner often cast the deciding vote between Rubin and Summers, who was Rubin's deputy through much of the Clinton era. Summers was a restless type, prone to intervening aggressively if there was a chance it could succeed. Rubin, on the other hand, deferred decisions as long as possible and erred on the side of caution even then. As Summers once explained to The New York Times, Rubin believed "that there is something worse than Country X going down, which is Country X going down and taking our credibility and $10 billion of our money with it.''
    In this mix, Geithner often made action possible by setting Rubin's tortured soul at ease. When, for example, the collapse of the Korean financial system in 1997 triggered a global crisis, Summers recommended an overwhelming response--a U.S.-sponsored bailout on top of an accelerated IMF package worth tens of billions. But the idea gave Rubin agita. It was Geithner who, according to one colleague, nudged Treasury toward a successful middle ground. Summers himself viewed Geithner as such a crucial counterweight that, the following year, he helped make Geithner Treasury's top international official.

    In recent weeks, another financial crisis has ushered Geithner and Summers onto center stage. Geithner has helped guide the government's response from his perch at the New York Fed; many see him as the most pragmatic voice in a trio that includes Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson, two men skeptical of market interventions. "The idea that the Fed did as much as it did--with new facilities, new ideas--the breadth of it is stunning," says one former Fed official.

    Tim Geithner, Treasury Secretary: Latest News, Video

  2. #2
    Elite Member Fluffy's Avatar
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    I like the Geithner pick. Here are some posts I've read about him previously:
    Monday, Sept. 18, 2006 14:47 PDT
    Filter proliferation

    On Friday, Brad DeLong, the economic historian at U.C. Berkeley who pioneered the art of econoblogging, confessed that it was after lunch and he hadn't yet read the Wall Street Journal. Instead, he was using Mark Thoma at Economist's View and Felix Salmon at Econoblogger "as economic news preprocessors."

    Thoma and Salmon, like DeLong, are prolific bloggers. Line up enough of these pre-processors in your blog aggregator, as I do, and you get the benefit of a bevy of smart people filtering the critical news of the day -- and then deconstructing, critiquing and otherwise adding value to that information. What would once have required taking an article from the Wall Street Journal or New York Times or Financial Times into a graduate level seminar and having it taken apart by a professor and a few other bright students is now available, in infinitely greater scope and detail, for free, on every subject of interest to humanity. For my own project here, striving to better understand globalization, the ongoing assembly of rank upon rank of pre-processors on a network of related subjects -- the economy, China, India, energy and the environment, and intellectual property -- has become a vital part of my daily explorations. In the age of information overload, tweaking your filters is job No. 1.

    Resisting the impulse to endlessly engage in filter accretion -- and the consequent metalayer of information overload -- requires no shortage of will power. Today I added A Fistful of Euros, a group blog devoted to the European economy, and Taiwan/China Theory/Future, a thoughtful and idiosyncratic take on my favorite part of East Asia by academic Mark Harrison. And yet, even as I was plugging their RSS feeds into my aggregator I was quailing at how many new items had popped up, ready for my perusal, over the weekend. Enter blog guilt -- a sickening feeling well recognized in the blogosphere -- the uneasy sensation one gets when one falls behind on one's filters. What am I missing? How far behind in the "conversation" have I fallen?

    But there is a flip side to this soul-killing overload, an advantage to oversubscription, a happy serendipity inherent in the accumulation of more pre-processors than the brain can adequately process.

    Long speeches by central bankers are not a regular part of my daily reading list. So I'll cop to skipping over the first couple of mentions of a speech Friday by New York Federal Reserve Bank president Timothy Geithner on hedge fund and derivative regulation. But by the third or fourth mention -- by the time that the econobloggers had started comparing the press coverage of the speech, and were pointing to each other's summaries and cut-and-pastes -- the sheer number of mentions were themselves a clear signal that this was something I should pay attention to. Out of the cacophony of a hundred filters blooming, a mandate rings through, clear and true.

    So I read it. For the most part, as is typical of central bankers, Geithner stakes out a careful, cautious stance that treads familiar ground: the difficulty of striking the right balance between regulatory supervision and unfettered market efficiency. But his caution surrounds a dangerous core: Geithner acknowledges that the explosion, over the past 10 years, of hedge fund trading in exotic financial instruments may well have contributed to the general resilience that the U.S. (and global) financial system has demonstrated in response to external shocks since the Asian financial crisis of the late '90s. And yet he surmises at the same time that the very flexibility of the current system may actually make it more vulnerable to a really, really big shock.

    Financial panics start when traders and bankers who call in loans or sell off their holdings at the first sign of trouble set off a cascading effect in which everybody else follows their example and the system implodes under the strain. Paradoxically, Geithner appeared to be saying, the more flexible the system, the more quickly such a cascade could happen, and the harder it could be to stop.

    "The same factors that may have reduced the probability of future systemic events, however, may amplify the damage caused by and complicate the management of very severe financial shocks. The changes that have reduced the vulnerability of the system to smaller shocks may have increased the severity of the large ones."

    That's a subtle argument, and we're not going to know whether it holds water until the flood is already 5 feet high and rising. Naturally, given my own fixations, the first thing that came to my mind was yesterday's editorial in the New York Times worrying about the proliferation of mortgage-backed securities, and wondering what would be the consequences of all the current musical-chairs-like trading in mortgage risk in the event of a prolonged housing bust. Will that be the backbreaker?

    We'll watch and see, and learn some more from the near instantaneous critiques of the editorial that have already appeared in the blogosphere. And maybe see if we can dig up some pre-processors who focus explicitly on derivatives, because that might be useful, in the long run.

    Too much information, or not enough? Too many pre-processors, or not enough? Too hot, too cold, or just right? Too much tweaking the filters, at the expense of actual learning? People worry whether the traditional practice of journalistic newsgathering will be undermined by all these parasitical bloggers delivering content to people for free. But all I see right now is more people gathering more information and redistributing it than ever before. I guess I'll believe there is a problem to worry about in that domain when my filters start to dry up and I wake up one day having caught up with all the news.
    ― Andrew Leonard
    Filter proliferation - How the World Works - Salon.com
    Wednesday, Sept. 24, 2008 15:30 PDT
    Who do you trust to pick the next Treasury Secretary?

    As we digest the news that John McCain, who has missed more votes in Congress over the last two years than any other Senator, is suspending his campaign and wants to duck Friday's debate, in order to offer his help crafting a bailout plan, now is as good a time as any to mull over what could be one of the first significant early tests for the next President. Who would Obama or McCain pick for the job of Treasury Secretary?

    If the current crisis tells us anything, it is that the job of Treasury Secretary is of preeminent importance -- especially if Congress grants Paulson anything like the discretionary fiscal power he is asking for. Whether you think Paulson is just another Wall Street fat cat grabbing goodies for his pals, or is actually motivated by a concern over the state of the economy, I think we should all be breathing a sigh of relief that neither of his predecessors, John Snow or Paul O'Neill, were in charge of grappling the current crisis. A recent New York Times story exploring possible choices for the job noted that O'Neill and Snow were two of "the least regarded Treasury secretaries of recent decades." The Times was being polite.

    My interest is not in handicapping who will get the job -- the Times story does a good job of that, as does economist Menzie Chinn at Econbrowser earlier today. What interests me is that both the Wall Street Journal and the New York Times have speculated that Tim Geithner, President of the New York Federal Reserve Bank and a veteran of the Clinton Administration Treasury Department, is high on the list of likely Democratic prospects. Both papers observe that Geithner has been on the front lines of dealing with the current crisis.

    But neither paper notes what to me is his greatest qualification -- his early warning about the potential for exactly the kind of crisis we are currently enduring. On Sept. 15, 2006, Timothy Geithner gave a speech on hedge fund and derivatives regulation.

    As I wrote at the time:
    Geithner acknowledges that the explosion, over the past 10 years, of hedge fund trading in exotic financial instruments may well have contributed to the general resilience that the U.S. (and global) financial system has demonstrated in response to external shocks since the Asian financial crisis of the late '90s. And yet he surmises at the same time that the very flexibility of the current system may actually make it more vulnerable to a really, really big shock.

    Financial panics start when traders and bankers who call in loans or sell off their holdings at the first sign of trouble set off a cascading effect in which everybody else follows their example and the system implodes under the strain. Paradoxically, Geithner appeared to be saying, the more flexible the system, the more quickly such a cascade could happen, and the harder it could be to stop.
    The same factors that may have reduced the probability of future systemic events, however, may amplify the damage caused by and complicate the management of very severe financial shocks. The changes that have reduced the vulnerability of the system to smaller shocks may have increased the severity of the large ones.
    That's a subtle argument, and we're not going to know whether it holds water until the flood is already 5 feet high and rising.
    Imagine, a man with the foresight to worry about how unregulated credit derivatives could increase the chances of systemic failure. Imagine having a President who might pick such a person as Treasury Secretary.

    Or, conversely, imagine the surprises a John McCain could deliver. Maybe he'd pick a Robert Zoellick (a Goldman alum who is currently president of the World Bank) or a John Thain, (who just sold Merrill Lynch to the Bank of America.) Wall Street would likely not be upset at either choice. Or maybe he'd pick someone completely out of left field. As McCain demonstrates for us on daily basis, there's really no telling what surprises are up his sleeve.
    ― Andrew Leonard

    Who do you trust to pick the next Treasury Secretary? - How the World Works - Salon.com

  3. #3
    Elite Member Str8_uncut-jock's Avatar
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    Dow jumped 500 points today on the news of his appointment. This is great news. Obama has not missed a beat thus far in his appointments!

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    Elite Member kingcap72's Avatar
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    This guy sounds like a good choice. I was hoping for Buffet, but as long as it's not Jon Corzine I'm happy.

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    Elite Member msdeb's Avatar
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    so far so good for the choices he's made.
    Basic rule of Gossip Rocks: Don't be a dick.Tati
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    I've been thinking for a long time that we need hedge fund and securities derivatives regulation so I am very pleased with this pick. I hope they follow through. It makes me sick that these types of investments increase the volatility of the market. We need to get back to basics so that the market prices represent the true value of the underlying securities.

  7. #7
    Elite Member Str8_uncut-jock's Avatar
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    Summers is also expected to serve on the economic team, just not as secretary. Together, these guys are going to do a great job! It just keeps getting better and better!

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    Elite Member Brookie's Avatar
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    And - bonus opportunity - he's not ugly either. Score another one in that (shallow) category.

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