Marketplace Scratch Pad

Geithner may not survive

Scott Jagow Mar 18, 2009

To say Treasury Secretary Tim Geithner is on the hot seat would be an understatement. The chorus calling for him to lose his job is decidedly stronger this morning. The President is still showing him public support, but Obama also just hired Citigroup’s chief economist to come to the Treasury and help Geithner.

The Wall Street Journal’s take on the hiring of Lewis Alexander:

The Obama administration so far has largely avoided tapping Wall Street officials for senior spots at the Treasury, wary of stoking the mounting political backlash surrounding the federal bailouts of the finance industry. That has irked top executives at some banks, who say they can’t get an audience with top Treasury officials.

Seriously? Larry Kudlow at Real Clear Markets points out why there seems to be a lack of communication, a lack of decisiveness and a lack of coherent strategy.

(The government’s outrage of AIG bonuses) shows, once again, why the government shouldn’t run anything, because it cannot run anything.

AIG should have been placed in bankruptcy last fall under some sort of government sponsorship. While in bankruptcy, all the salary contracts (and every other AIG contract) would have been nullified and voided. At the same time, there would have been an orderly liquidation and sale of AIG’s assets and separate divisions.

Last fall, the Bush Administration was still in charge, but the Obama people, including Geithner had to know the circumstances at AIG. I just don’t buy the claim that they didn’t know about the bonus payments that were coming.

The calls for Geithner’s head are coming from mostly conservative voices, but that doesn’t mean there isn’t a mounting case against his job performance:

Henry Blodget at Clusterstock: “In a normal environment, the country might have time to wait for Tim Geithner to recover from his early missteps. In the current crisis, however, we don’t.”

Mike “Mish” Shedlock: “It’s clear to everyone that Treasury Secretary Geithner is in over his head and has no idea what he is doing. He should be fired.”

Steve Forbes: “President Obama should take a cue from his hero, Abraham Lincoln. During the Civil War Lincoln never hesitated to fire generals he thought weren’t up to the task. Obama should do the same thing with his economic commanders.”

Intrade is taking bets on whether Geithner will last beyond June 30. His chart has a decidedly upward trend the past few days:

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Geithner can’t expected to be a miracle worker. But we can expect him to move the Treasury’s plan forward with authority, to take decisive, forceful action instead of reacting with “outrage” after the fact to things he clearly should have known or did know. If there’s someone out there who can take charge and be honest with the taxpayers, I don’t care where they come from, and that includes Wall Street.

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