According to a source working closely with the Treasury on its financial system rescue plan, Treasury Secretary Timothy Geithner continues to be hobbled by a lack of support staff, delaying the long-awaited plan to cleanse the big banks of toxic assets. The problem appears to be that political considerations have impeded those appointments.
"It's all being bottled up at the White House," says our source, noting that the Obama administration is wary of nominating too many staffers with close ties to Wall Street. This is a difficult task, because few outside Wall Street have the expertise needed to grapple with the complex issues raised by the rescue, but the administration finds itself in a box. After all, it has instituted a tough ethics policy, which limits departmental contact with lobbyists and industry insiders.
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Also slowing the process is the emphasis on a more diligent vetting process, following the high-profile Cabinet nomination stumbles of Geithner, former health and human services nominee Tom Daschle, and commerce nominee and New Mexico Governor Bill Richardson.
However, there are signs that pressure to speed up staffing at Treasury is growing. Paul Volcker, former Federal Reserve chairman and one of Obama's top economic advisers, Thursday blasted Treasury's understaffing.
"There is an area that I think is, I don't know, shameful is the word," said Volcker at a Joint Economic Committee hearing, according to ABC News. "The secretary of the Treasury is sitting there without a deputy, without any undersecretaries, without any, as far as I know, assistant secretaries responsible in substantive areas at a time of very severe crisis. He shouldn't be sitting there alone."
Our source also took a sympathetic view toward Geithner, who is increasingly being portrayed as sitting alone in his office at Fifteen Street and Pennsylvania Avenue. "It's like he's being set up by Obama to fail," the source says, noting that the president's touting of Geithner's rescue plan did much to set up unrealistic expectations for the Treasury secretary's poorly received speech, which introduced his Financial Stability Plan on Feb. 10. - Vipal Monga
