TNYT on Geithner: Barring any new disclosures, we heard nothing disqualifying

For Treasury Secretary. TNYT Editorial
Timothy Geithner’s tax problems took up much of his confirmation hearing. Barring any new disclosures, we heard nothing disqualifying
TNYT, Jan 22, 2009

If ever there was a moment when the Senate should have used the confirmation process to delve into the big issues confronting the nation, it was at Wednesday’s hearing for Treasury Secretary-designate Timothy Geithner.

Unfortunately, Mr. Geithner’s self-inflicted tax problems made that hard. But even after the nominee admitted that his failure to pay tens of thousands of dollars in federal taxes had been “careless” but “unintentional” (he has since paid back taxes, plus interest) members of the Finance Committee were not terribly sharp in their questions about how Mr. Geithner will help President Obama face down the country’s desperate financial problems.

We were not impressed with Mr. Geithner’s excuses for his tax problems, but barring any new damaging disclosures, we heard nothing disqualifying. He is clearly an intelligent man and Mr. Obama is entitled to pick his own team.

Wall Street is also comfortable with the choice. That is an endorsement that cuts both ways — but one that could advance the cause of renewed regulation if Mr. Obama lives up to his promises and is a strong champion for regulatory reform.

We still don’t have a clear picture of Mr. Geithner’s role — as president of the Federal Reserve Bank of New York for the past five years — in the decisions to bail out Bear Stearns, the American International Group and Citigroup, or the decision to let Lehman Brothers go under.

The Finance Committee is expected to approve his nomination Thursday, but before the full Senate votes, we hope that we will hear more from Mr. Geithner and the president on their plans for unraveling the nation’s desperate financial mess.

At the hearing, Mr. Geithner was unchallenged when he said that the disastrous collapse of Lehman Brothers last September occurred because the government had no legal authority to intervene. That narrative surfaced weeks after the collapse and contradicts explanations given at the time.

It is certainly not the type of open, transparent, and fully accountable explanation that the new president is promising.

At the hearing, Mr. Geithner did give a good general outline of the administration’s plan to right the nation’s financial system, saying Mr. Obama would lay out, “we hope in the next few weeks,” a comprehensive plan to get the banks lending again, to address the foreclosure crisis and to directly address the lack of credit to small businesses and consumers.

Like most nominees, Mr. Geithner gave vague answers when asked more detailed questions. He promised new financial regulation, but also referred often to a new regulatory “framework.” It remains to be seen if the goal is to put in place robust new rules or — as the Bush team proposed last year — just rearrange agencies.

The entire Obama economic team earned their stripes — for good and more often ill — during the deregulatory and self-regulatory efforts of the 1990s and this decade. The nation needs more and better information and reassurance, about what they have learned from that past and how they will lead the nation in the vastly different direction that Mr. Obama has promised.