Obama picks confessed tax evader as Treasury Secretary

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Obama picks confessed tax evader as Treasury Secretary

Quote:
The man tipped to lead U.S. President Barack Obama's recovery plan for the flagging American economy apologized to Congress on Wednesday during his confirmation hearing, saying he was careless in not paying $34,000 US in taxes earlier this decade.

Treasury secretary-designate Tim Geithner called the failure to pay the social security and medicare taxes "careless mistakes" and unavoidable ones.

The former head of the New York Federal Reserve told the Senate finance committee the failure to pay was "unintentional."

"I should have been more careful," he said.

http://www.cbc.ca/money/story/2009/01/21/geithner-treasury.html

abnormal

Everybody's fixated with his tax problems.  They're nothing new.  After all, Rangell has his own tax problems and Pelosi still supports him as Chair of Ways and Means. 

Geithner's excuses are "interesting" since his employer sent out quarterly notices.  But that's only a fraction of the baggage he brings with him.

http://www.nytimes.com/2008/11/25/business/25sorkin.html?dbk

Quote:

President-elect Barack Obama unveiled on Monday an economic team with deep experience handling economic crises. But does the man at the center of this star-studded cast, Timothy F. Geithner, the nominee for Treasury secretary, have what is needed to take the nation in a new financial direction?

That is what a number of Wall Street chieftains are quietly asking, even after the stock market surged with relief after his nomination.

One reason Mr. Obama gave for nominating Mr. Geithner was his “unparalleled understanding of our current economic crisis, in all of its depth, complexity and urgency.” More important, he suggested, “Tim will waste no time getting up to speed. He will start his first day on the job with a unique insight into the failures of today’s markets — and a clear vision of the steps we must take to revive them.”

Mr. Geithner is clearly a 47-year-old wonder boy.

A graduate of Dartmouth, he has a master’s degree from the Johns Hopkins School of Advanced International Studies, did a turn with Henry Kissinger’s consulting firm, a stint in the Clinton administration and, for the last five years, has been the president of the Federal Reserve Bank of New York.

He will effectively lead the team Mr. Obama has chosen to mend a crippled economy. That’s important because they won’t just be debating economic theory — they will be making deals Wall Street-style, negotiating billion-dollar bailouts and restructuring entire industries on behalf of their client, the taxpayers.

But Mr. Geithner’s involvement in several ultimately ill-fated efforts to buttress the American financial system is the very reason some Wall Street C.E.O.’s — a number of whom spoke on the condition of anonymity for fear of piquing the man who regulates them — question whether he’s up to the challenge.

“We have only two things to say about Tim Geithner, who we do not know: A.I.G. and Lehman Brothers,” said Christopher Whalen of Institutional Risk Analytics. “Throw in the Bear Stearns/Maiden Lane fiasco for good measure,” he said.

“All of these ‘rescues’ are a disaster for the taxpayer, for the financial markets and also for the Federal Reserve System as an organization. Geithner, in our view, deserves retirement, not promotion.”

Ouch.

“He was in the room at every turn of the crisis,” said another executive who participated in several such confidential meetings with Mr. Geithner. “You can look at that both ways.”

While Henry M. Paulson Jr., the current Treasury secretary, has taken a drubbing for the changeable nature of the government’s efforts to bolster the financial industry — some of which clearly contradicted each other — Mr. Geithner has managed, for the most part, to remain unscathed. He’s been widely praised as a bright, articulate out-of-the box thinker who is a bailout expert, to the extent anyone can truly be an expert at fast-changing emergencies.

Behind the scenes, Mr. Geithner was the point person for weeks of sleep-deprived Bailout Weekends. It was Mr. Geithner, not Mr. Paulson, for example, who put together the original rescue plan for the American International Group.

And, of course, Mr. Geithner also helped oversee and regulate an entire industry whose decline has delivered a further blow to an already weakened American economy. Under his watch, some of the biggest institutions that were the responsibility of the New York Fed — Bear Stearns, Lehman Brothers, Merrill Lynch and most recently, Citigroup — faltered. While he was one of the first regulators to smartly articulate the potential for an impending disaster, a number of observers question whether he went far enough to stop the calamity.

Perhaps what has most people on Wall Street stirring is Mr. Geithner’s role in the fall of Lehman. At the time of its bankruptcy, he, along with Mr. Paulson, appeared to be the most vocal in supporting the government’s refusal to bail out the firm, according to people involved in various meetings. With hindsight, many in the financial industry blame a deepening of the global financial crisis on the government’s decision to let Lehman crumble.

Perhaps not surprisingly, there have been moves afoot in recent weeks by some in the New York Fed and Obama team to put distance between Mr. Paulson and Mr. Geithner, whose salary was $398,200 last year and who will take a pay cut to $191,300 in his new role.

These include the suggestion that Mr. Geithner was not in league with Mr. Paulson over Lehman; that Mr. Geithner pressed to save the firm from bankruptcy; that he was a lone voice on the subject and was overruled by Mr. Paulson and Ben S. Bernanke, the Fed chairman, on this issue.

The validity of this new claim is hard to verify. The New York Fed declined to comment.

Many executives suggest it may be a bit of revisionist history. “If that’s true, he did a good job of hiding it,” said one executive who spent the weekend at the New York Federal Reserve the weekend of Lehman’s fall.

Mr. Paulson has only praise for Mr. Geithner. “I have the highest regard for Tim — his judgment and creativity have been critical to designing and implementing the necessary actions we’ve taken to protect and strengthen our financial system,” he said.

Let’s hope he’s right.

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