Geithner is sworn in as treasury secretary

January 26, 2009 7:04:50 PM PST
Timothy Geithner got the senate OK Monday, in spite of his failure to pay his taxes on time, and he was quickly sworn in as secretary of the treasury.

At Geitner's swearing in, President Barack Obama said the economy has been weakened by dangers decisions on Wall Street.

"And an unrelenting quest for profit without regard for risk too little regulatory scrutiny and too little accountability," Obama said.

The president praised Geithner, who spent most of his early career in the Treasury Department; he was appointed to head the New York branch of the Federal Reserve.

Geithner made some powerful friends along the way, including former Secretary of State Henry Kissinger, former Fed Chairman Alan Greenspan and Obama's national economic council chief Larry Summers.

"Everybody liked him from what I've read, nobody who worked with him doesn't like him," University of California, Berkeley economist Thomas Davidoff said.

Geithner is well regarded for good reason, according to Davidoff, despite the apologies he has been making recently.

Geithner says his failure to promptly pay overdue income taxes was unintentional, but that did not stop his opponents from making it a sticking point in his confirmation.

"How do I explain to my constituents that I voted to confirm someone who will make them pay taxes but sometimes doesn't pay his own taxes," Wyoming Sen. Mike Enzi said.

What has not been as thoroughly covered is whether Geithner saw the current economic crisis coming and what, if anything, he did about it.

On his board of directors at the New York Fed were some of the top people of Lehman Brothers, JP Morgan Chase and Goldman Sachs, the same companies that came looking for government bailouts.

But lots of experts did not see the financial crisis coming, Davidoff said.

"Most people in the economics profession, even in the finance business, weren't quite aware of the systemic risks that were being posed," Davidoff said. "To my knowledge, Geithner was not any more prescient than the norm."

But Davidoff is concerned about Geithner's ability to see what is coming next.

"What you worry about is, institutionally, is there an ability to think outside of the box, is there an ability to think beyond, 'what's good for Goldman Sachs and Morgan Stanley is good for America,'" Davidoff said.

At his swearing, Geithner said the economy is at a moment of maximum challenge. He said his agenda will be to make the economy more productive, to restore trust and make the tax system fairer and simpler.