It appears that American International Group Inc. (NYSE:AIG) is so intertwined in the financial system that the administration has to prop it up in spite of how unpopular it is. But can the same be said for the Treasury Secretary Tim Geithner?
The uproar over AIG shelling out retention bonuses to its financial products unit doesn't seem likely to die down anytime soon and has driven public approval for government bailouts from poor to dismal. The populist backlash already has some in Congress calling for heads to roll, and Tim Geithner, who was instrumental in all the bailouts beginning with Bear Stearns Cos. a year ago, is looking like the perfect fall guy.
The Intrade betting line on Geithner making it to June has spiked in only a few days as market participants increasingly lose faith in the secretary.
While at Clusterstock, where Henry Blodget has been calling for Geithner to resign since last month, lists the reasons he feels the Treasury secretary has to go:
- He still has no coherent plan to fix the banking system
- He has convinced no one that he's the right man to lead us out of this
- He helped design the past administration's failed bailouts
- He was the architect of the original AIG bailout
- He tacitly helped cover up the AIG "counterparty" bailout beneficiaries for six months
- He approved the latest round of AIG bonuses last week (according to AIG)
Still the Obama administration appears willing to stand by Geithner as criticism builds. To be sure, Geithner has had a rough time in his short time at Treasury, and the
lack of lieutenants in the department has further hamstrung his efforts to get on top of the banking crisis. Firing Geithner is unlikely since it would be highly embarrassing to both the secretary and Obama. But if the AIG debacle continues to worsen, Geithner may find himself having to take one for the team. -
George White
