The Education of Timothy Geithner
For weeks he's looked like a deer in the headlights, flubbing speeches and rattling markets. But the Treasury chief retains the support of his boss—and he's starting to hit his stride.
By Michael Hirsh | NEWSWEEK
Published Mar 28, 2009
Tim Geithner can't stop smiling and laughing—he's actually relaxed, in fact. The new Treasury secretary has just come off the biggest week in his life, though when asked about it he adopts that sober, intense look the public knows so well, insisting he's not over any hump. "Sure, it's nice, but I know how fickle this stuff is. I'm going to be doing all sorts of unpopular things for a long time," he says, sitting in his office late last week under the stern eye of Alexander Hamilton's portrait.
It's the first time, maybe, that Geithner feels really at home here. For two months the smart newcomer with the boyish demeanor seemed to stumble again and again as Obama's point man on the financial crisis. Part of the problem was stagecraft: he lacked the deep voice or the gray hairs of a Washington wise man, and he stared at teleprompters as if he'd never used them before. But he also disappointed markets and pundits with what seemed like hesitant half-steps. The attacks on him grew ever more savage. Bill Maher put up photos of Geithner alongside a deer in the headlights and suggested that President Obama ought to just hire the deer. Bloggers began comparing him to Macaulay Culkin, joking that he was "home alone" at the undermanned Treasury. "Quite simply, the Timothy Geithner experience has been a disaster," Republican Rep. Connie Mack announced at one point, calling for his resignation "for the good of the country."
You probably won't hear that again, at least for a while. Last Monday, March 23, Geithner delivered the long-awaited details of his scheme to save the banking system. While it remains controversial, the promise of a payday "dazzled" Wall Street, The New York Times reported. ("We hadn't seen that word before," noted one bleary-eyed but satisfied Treasury aide.) A few days later Geithner revealed the most dramatic plan for regulating finance since the Glass-Steagall Act of 1933 (the dismantling of which a decade ago may have contributed to the crisis). Among other things, he called for broad regulation of derivatives trading, nonbanks and hedge funds—precisely the kinds of reforms that, the last time Geithner was in Washington in the '90s, the Treasury Department avoided. Most of all, Geithner seemed, at long last, to take charge: even his congressional testimony sounded more assertive.
There seemed to be a feeling of relief all around. That was certainly true for Geithner's father, Peter—whose career as an international-development expert started Tim on his path to Washington while he was growing up in Africa, India and Thailand. "We all hope the corner has been turned," Peter Geithner said. "It's not easy to read the papers every morning." There was also relief at the White House. "The fever broke," White House chief of staff Rahm Emanuel told NEWSWEEK. And at the Fed, Ben Bernanke, in a rare interview, gave Geithner a lot of credit for the change in mood. "He's extraordinarily intense, extremely competent and insightful. He knows a huge amount about the markets," says Bernanke, who added that he respects Geithner's "equanimity under fire."
Obama senior adviser David Axelrod calls the last two months Geithner's "learning period." The 47-year-old Treasury secretary is the same age as the president and has 20 years of experience taking on crises, but he had never before been fully in the spotlight, certainly not in the middle of a catastrophe like this. "He hasn't played the center ring until now," Axelrod told NEWSWEEK. "There is a bully pulpit, a
theatricality to the role that is unlike any role he's held before." Others note that past Treasury secretaries didn't gain their aura of omniscience—whether deserved or not—until they had proved themselves in crisis. Geithner himself says that he stays sane by focusing on just that: getting things done, making hard choices and knowing that he'll be judged not by the day-to-day yelps and cries of critics, but by what he's accomplished once his decisions take effect.
Geithner started off badly in January—and things just seemed to get worse from there. The straitlaced civil servant was forced to admit within days of Obama's inauguration that he had failed to pay all his taxes. He won confirmation by a vote of 60–34, but it was the closest tally for any Treasury secretary since World War II. That put Geithner—who is publicity-shy even in normal times—at a moral disadvantage when he should have been a dominant voice dictating policy to Washington and Wall Street. "Because of the tax issue, he couldn't come off being too strong-voiced," says a former senior official at the New York Fed who knows Geithner well, but asked for anonymity when giving a personal assessment of him. "The problem was, by treading softly people said he didn't have the gravitas."
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