Editor's Note: This is part two of a two-part series on the role of Dartmouth alumnus and Treasury Secretary Timothy Geithner '83 in the federal government's response to the ongoing economic crisis.
Having withstood recent calls for his resignation, Treasury Secretary Timothy Geithner '83 still faces international skepticism, staffing difficulties and a harsh political climate in Washington as he works to solve the current financial crisis.
Several high level positions at the Treasury Department remain vacant, and Geithner is the only top Treasury official who has been confirmed by the Senate. The Senate Finance Committee's strict vetting standards have contributed to the voluntary withdrawal of two nominees for Treasury positions, according to The Politico. That committee had revealed Geithner's previous failure to pay $34,000 in taxes during his confirmation process and forced Secretary of Health and Human Services nominee Tom Daschle, the former Democratic Senator and majority leader, to withdraw.
Many qualified financial experts working in the private sector may have decided not to apply for Treasury positions because of the vetting process, Robert Teitelman, editor-in-chief of the financial magazine The Deal, said in an interview with The Dartmouth.
"I think some folks on Wall Street who may be qualified to advise or work for Geithner may have chosen that it's the better part of valor not to go," he said, pointing to the grueling vetting process and Congress' perceived hostility towards bankers and financiers.
A "senior person in the legal profession" also did not apply for a top Treasury position because he did not want his entire record examined, according to Teitelman, who said he suspects that there were other potential nominees who backed away for the same reason.
"Confirmation is always a difficult process," he said. "It was probably made more difficult by the Geithner tax problem. It was made infinitely more difficult by the banking crisis right now."
The staffing difficulties have also forced the Treasury Department to delay the release of detailed plans for a world financial regulation regime until after the G-20 summit, a meeting of the group of 20 industrialized nations, and may have contributed to the perception on Capitol Hill that Geithner's February framework for the financial rescue plan was overly vague.
Geithner's March 23 recovery plan, which involves the creation of a "Public-Private Investment Program" in which the government and banks will work together to buy so-called "toxic" mortgage assets, may also prove politically difficult, according to Douglas Elliott, a fellow at the Brookings Institute and former J.P. Morgan investment banker.
"The American public by and large doesn't like bankers at this point, and doing something that provides aid to the bankers requires very good communication," he said.
Controversy surrounding Geithner's recent performance may hinder the Obama administration's ability to implement its policies, economics professor Andrew Samwick said.
"When it looks like you're making simple mistakes like the AIG bonus confusion, then it appears you may be vulnerable," Samwick said. "Someone who disagrees with your priorities may push back harder than they may have otherwise."
Elliott cautioned that the administration is still young.
"It's too early to tell what the level of credibility will be of the administration and Secretary Geithner at the point when we do need further legislation," he said.
Geithner emphasized that the department has made progress in addressing the national financial system during a Sunday appearance on "Meet the Press."
"We've been doing a huge amount of important, productive, consequential programs in a short period of time," he said.
An additional challenge may come from the upcoming G-20 summit on April 2. Geithner and President Barack Obama must use the summit, which will focus on the financial crisis, to restore the United States' credibility as the leader of the global financial system, according to Ed Paisley, vice president for editorial at the Center for American Progress, a liberal research organization.
The recent improvement in Geithner's political fortune will greatly help the United States advance its agenda, which includes developing methods to police the global financial sector and pushing European countries to inject more money into their economies, Paisley said.
"It did not look good for him going into the G-20 a month ago," Paisley said. "What he did this week before going there has built up his stature for the G-20 meeting."
Elliott, though, said that the controversy surrounding Geithner will likely have no affect on the United States' ability to wield influence at the summit, which Elliott said "was always going to be difficult."
The Treasury Department and Senate Finance Committee could not be reached for comment. The White House declined requests for comment.
