If the reports from NBC News are true, and President-elect Barack Obama
on Monday will formally announce Timothy Geithner, Federal Reserve Bank
of New York president, as his pick for Treasury secretary, then change
will certainly come to Treasury. While many of the potential Obama
cabinet picks (like Bill Richardson to Commerce, which was part of the
same news report) are re-hashed Clintonites, Geithner is a break from
that past -- unlike Geithner's apparent chief rival for the job, Larry
Summers, President Clinton's last Treasury secretary.
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Geithner will bring to the post 20 years of experience at both
Treasury under Summers and Robert Rubin and the Federal Reserve under
Alan Greenspan and Ben Bernanke, and likely can hit the ground running
having already worked closely with Federal Reserve chairman Bernanke on
the Bear Stearns and AIG bailouts. Additionally, he already has a
working relationship with outgoing secretary Hank Paulson.
Picking Summers would have meant Paulson and his team would have
had to spend time debriefing him on the Troubled Asset Relief Plan.
Additionally, Summers would have brought with him a great deal of
baggage associated with some of the comments he made as president of
Harvard University, possibly providing a distraction from the effort to
stabilize the economy.
Clearly the markets agreed with the decision. After the Dow bounced
around all day between negative and positive territory, the Dow began a
100 point rally within minutes of the 3 pm announcement on CNBC, which
continued to gain steam as other media outlets confirmed the rumor. The
Dow ultimately closed up 494 points to 8,046. The 3 pm leak to NBC News
clearly shows the financial savviness of the Obama team. - Matthew Wurtzel
See Geithner's bio from the Federal Reserve's Web site
Matthew Wurtzel is the editor of Dealscape.
