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Timothy Franz Geithner ( ; born August 18, 1961) is the 75th and current United States Secretary of the Treasury, serving under President Barack Obama. He was previously the president of the Federal Reserve Bank of New Yorkmarker.

Geithner's position includes a large role in directing the Federal Government's economic response to the financial crisis which began after December 2007. Specific tasks include directing the allocation of the $350 billion of Wall Street bailout funds. He is currently dealing with multiple high visibility issues, including the survival of the automobile industry, the restructuring of banks, financial institutions and insurance companies, recovery of the mortgage market, demands for protectionism, President Obama's tax changes, and relations with foreign governments that are dealing with similar crises.

Family and education

Geithner was born in Brooklynmarker, New York Citymarker and spent most of his childhood outside the United States, including present-day Zimbabwemarker, Zambiamarker, Indiamarker and Thailandmarker where he completed high school at the International School Bangkokmarker. He attended Dartmouth Collegemarker, graduating with an A.B. in government and Asian studies in 1983. In the process he studied Mandarin at Peking Universitymarker in 1981 and at Beijing Normal Universitymarker in 1982. He earned an M.A. in international economics and East Asian studies from Johns Hopkins University's School of Advanced International Studies in 1985. He has studied Chinese and Japanese.

Geithner's paternal grandfather, Paul Herman Geithner (1902–1972), emigrated with his parents from the Germanmarker town of Zeulenroda-Triebesmarker to Philadelphiamarker in 1908. His father, Peter F. Geithner, was the director of the Asia program at the Ford Foundation in New Yorkmarker in the 1990s. During the early 1980s, Peter Geithner oversaw the Ford Foundation's microfinance programs in Indonesia being developed by Ann Dunham, President Barack Obama's mother, and they met in person at least once. Timothy Geithner's mother, Deborah Moore Geithner, is a pianist and piano teacher in Larchmont, New Yorkmarker where his parents currently reside. Geithner's maternal grandfather, Charles F. Moore, was an adviser to President Dwight D. Eisenhower and served as Vice President of Public Relations from 1952-1964 for Ford Motor Company.

Early career

Geithner worked for Kissinger Associates in Washington for three years and then joined the International Affairs division of the U.S.marker Treasury Departmentmarker in 1988. He went on to serve as an attaché at the Embassy of the United States in Tokyomarker. He was deputy assistant secretary for international monetary and financial policy (1995–1996), senior deputy assistant secretary for international affairs (1996-1997), assistant secretary for international affairs (1997–1998).

He was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers. Summers was his mentor, but other sources call him a Rubin protégé.
In 2002 he left the Treasury to join the Council on Foreign Relations as a Senior Fellow in the International Economics department. He was director of the Policy Development and Review Department (2001-2003) at the International Monetary Fundmarker.

In October 2003 at age 42, he was named president of the Federal Reserve Bank of New Yorkmarker. His salary in 2007 was $398,200. Once at the New York Fed, he became Vice Chairman of the Federal Open Market Committee component. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty. In May 2007 he worked to reduce the capital required to run a bank. In November he rejected Sanford Weill's offer to take over as Citigroup's chief executive.

In March 2008, he arranged the rescue and sale of Bear Stearns; in the same year, he played a pivotal role in both the decision to bail out AIG as well as the government decision not to save Lehman Brothers from bankruptcy, though claims were made after Geithner's nomination that distanced him from both AIG and Lehman Brothers.As a Treasury official, he helped manage multiple international crises of the 1990s in Brazilmarker, Mexicomarker, Indonesiamarker, South Koreamarker and Thailandmarker.

Geithner believes, along with Henry Paulson, that the United States Department of the Treasurymarker needs new authority to experiment with responses to the financial crisis of 2007–2009. Paulson has described Geithner as "[a] very unusually talented young man...[who] understands government and understands markets."

On 10/27/09 it was reported by Bloomberg news that while acting as president of the New York Federal Reserve Tim Geithner arranged for Goldman Sachs, Société Générale, and Deutsche Bank to receive full payment on credit default swaps they had purchased rather than 40 cents on the dollar insurance giant AIG proposed. A Fed-run entity called Maiden Lane III was used to shunt these CDOs, which cost American tax payers at least $13 billion dollars at the time. It is currently estimated that due to a decline in value, the total costs for this bank favoritism case cost the American tax payers $35.6 billion total. To quote Bloomberg: "the deal contributed to the more than $14 billion that over 18 months was handed to Goldman Sachs, whose former chairman, Stephen Friedman, was chairman of the board of directors of the New York Fed when the decision was made."

Secretary of the Treasury nomination

On November 24, 2008, then-President-elect Barack Obama announced his intention to nominate Geithner to be Treasury Secretary.

China

Geithner, and the Obama administration, appeared to adopt a somewhat confrontational stance towards China'smarker economic policies during the campaign and the nominal period. Geithner, in written comments to the Senate Finance Committee, states that the new administration believes Beijing is "manipulating" its currency and that the Obama administration will act "aggressively" using "all the diplomatic avenues" to change China's currency practices. The Obama administration would pressure China diplomatically to change this practice, more strongly than the George W. Bush Administration did. The United States maintains that China's actions hurt American businesses and contributed to the financial crisis.In the early months of the Obama administration, Geithner continued to have a rocky relationship with the Chinese. During one of his trips in June of 2009, students at Peking University laughed at him for claiming China's US assets are safe.

Tax problems

At the Senate confirmation hearings, it was revealed that Geithner had not paid $35,000 in self-employment taxes for several years, even though he had acknowledged his obligation to do so, and had filed a request for, and received, a payment for half the taxes owed. The failure to pay self-employment taxes, in part due to the way his employer reported his wages which was not in accordance with tax law, was noted during a 2006 audit by the Internal Revenue Service (IRS), in which Geithner was assessed additional taxes of $14,847 for the 2003 and 2004 tax years. Geithner also failed to pay the self-employment taxes for the 2001 and 2002 tax years (for which the statute of limitations had expired) until after Obama expressed his intent to nominate Geithner to be Secretary of Treasury. He also deducted the cost of his children's sleep-away camp as a dependent care expense, when only expenses for day care are eligible for the deduction. Geithner subsequently paid the IRS the additional taxes owed, and was charged $15,000 interest, but was not fined for late payment. As President of the Federal Reserve Bank of New York, Geithner annually completed an ethics statement noting any taxes due or unpaid, along with any other obligations. Geithner's completed statement did not surface during confirmation hearings.

In a statement to the Senate panel considering his nomination, Geithner called the tax issues "careless," "avoidable" and "unintentional" errors, and he said he wanted to "apologize to the committee for putting you in the position of having to spend so much time on these issues." Geithner testified that he used TurboTax to prepare his own return and that the tax errors are his own responsibility. This statement is in conflict with statements by the Obama campaign that Geithner was advised by his accountant that he did not owe the taxes. The Washington Post quoted a tax expert who said that TurboTax has not been programmed to handle self-employment taxes when the user identifies himself as being employed. Geithner said at the hearing that he was always under the impression that he was an employee, not a self-employed contractor, while he served as director of the Policy Development and Review Department of the IMF. Geithner comments are contradicted by the Senate report that showed he was not only informed of his status, but that he actively applied for the allowance.

Confirmation

Geithner is sworn in as Treasury Secretary
On January 26, 2009, the U.S. Senate confirmed Geithner's appointment by a vote of 60–34. Geithner was sworn in as Treasury Secretary by Vice President Joe Biden and witnessed by President Barack Obama.

Secretary of the Treasury

Bank bailout

Geithner has the authority to decide what to do with the second tranche of $350 billion from the $700 billion banking bailout bill passed by Congress in October 2008. He does not need Congressional approval, but went to Congress on February 10-11 to explain his plans. He proposes to create one or more "bad banks" to buy and hold toxic assets, using a mix of taxpayer and private money. He also proposes to expand a lending program that would spend as much as $1 trillion to cover the decline in the issuance of securities backed by consumer loans. He further proposes to give banks new infusions of capital with which to lend. In exchange, banks would have to cut the salaries and perks of their executives and sharply limit dividends and corporate acquisitions. The plan has been criticized by Nobel-prize winning economist Paul Krugman as well as fellow Nobel laureate and former World Bank Chief Economist Joseph Stiglitz.

June 17, 2009:
Geithner speaking at the United States Department of Treasury.
Timothy Geithner along with President Obama proposed a new bureaucratic committee to oversee operations by the FDIC, Federal reserve, and the SEC. The committee would serve to consolidate governmental control over financials. Geithner, states “with new laws in place government will be able to take control of troubled institutions before it’s too late.”

AIG bonuses

Although President Obama expressed strong support for Geithner, the outrage over the AIG bonuses has undermined public support. AIG paid bonuses to executives in its Financial Services division after receiving more than $170 billion in federal bailout aid. Even prior to the election, senior aides to Timothy Geithner have closely dealt with American International Group Inc. on compensation issues including bonuses, both from his time as president of the Federal Reserve Bank of New York and as Treasury secretary. In early November, 2008, a committee concluded that the bonuses, which were in contracts signed before the government takeover, couldn't be legally blocked. On March 3, 2009, appearing at a hearing of the House Ways and Means Committee Rep. Joseph Crowley, a New York Democrat, asked him about the bonuses that AIG would be paying to financial-products employees "in the coming weeks." On March 11, Geithner called Mr. Edward Liddy, AIG chief, to protest the bonus payouts. Mr. Geithner and Federal Reserve Chairman Ben Bernanke attended a hearing by Congress on March 24, 2009.

China

Geithner met with Chinese Foreign Minister Yang Jiechi shortly after he assumed his role as Secretary of the Treasury. Geithner told Yang that the U.S. attaches great importance to its relations with China and that U.S.-China cooperation was essential in order for the world economy to fully recover.

During Tim Geithner's trip to China on June 1, 2009, he was asked a question from a student about the safety of Chinese investments in U.S. Treasury debt. Geithner quickly reassured the student questioner they were "Very safe", as the audience laughed.

Geithner co-chaired the high-profile U.S.–China Strategic and Economic Dialogue from July 27 to 28 in Washington, DC and led the Economic Track for the U.S. side.

Criticism

Geithner weathered a blast of criticism early in the Obama presidency, with former Republican lawmaker Connie Mack suggesting the secretary should resign over the AIG bonus scandal and Alabamamarker Senator Richard Shelby complaining that Geithner was "out of the loop". Democrats largely rallied to Geithner's defense, and there was no serious talk of Geithner losing his job.

Eight months later, Geithner again came under fire from members of both the Congressional Progressive Caucus and the Republican Party. Oregonmarker Representative Peter DeFazio, one of the most liberal lawmakers in Congress, suggested that both Geithner and Lawrence Summers, the director of the National Economic Council, should be fired in order to curtail unemployment and signal a new direction for the Obama administration's fiscal policy. "We think it is time, maybe, that we turn our focus to Main Street," said DeFazio, speaking for himself and some fellow members of the Progressive Caucus. When Geithner appeared in front of the Congressional Joint Economic Committee, the ranking House Republican, Kevin Brady of Texasmarker, said to the secretary, "Conservatives agree that, as point person, you've failed. Liberals are growing in that consensus as well. Poll after poll shows the public has lost confidence in this president's ability to handle the economy. For the sake of our jobs, will you step down from your post?" Geithner defended his record, suggesting Brady was misrepresenting the situation and overestimating popular disapproval of his job performance.

Family

He married Carole Sonnenfeld Geithner on June 8, 1985 at his parents' summer home in East Orleans, Mass.marker The Rev., Thomas Keehn, a United Church of Christ minister, officiated. Ms. Sonnenfeld Geithner was working as a research associate for Common Cause at the time of her marriage to Mr Geithner. Her father, Albert Sonnenfeld, was a professor of French and comparative literature at Princeton Universitymarker, and her mother, Portia Sonnenfeld, was the conductor of the Chamber Symphony of Princeton.

Prior to assuming his post with the Obama Administration, according to records Geithner and his wife purchased a five bedroom house near leafy Larchmont for $1.602 million in 2004, and in 2009 he tried to sell his home for $1.635 million after the U.S. real estate market collapse. After being on the market for months the price of the home was reduced to $1.575 million. After further lack of interest the home was rented for $7,500 On May 21, 2009 according to Scott Stiefrater of Stiefrater Real Estate and Debbie Meiliken of Keller Williams Realty, New York. The Daily Show with Jon Stewart recently created a segment examining the financial acumen of Timothy Geithner for actually asking more than he paid for the house in a depressed real estate market.

Timothy and Carole Sonnenfeld Geithner have two children, Elise (b. 1991) who attends Stanford Universitymarker, and Benjamin (b. 1994).

See also



Memberships



References

  1. http://www.treas.gov/press/releases/tg152.htm
  2. http://freepages.genealogy.rootsweb.ancestry.com/~battle/celeb/geithner.htm
  3. http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5423650/Geithner-insists-Chinese-dollar-assets-are-safe.html
  4. http://online.wsj.com/article/SB123187503629378119.html
  5. http://finance.senate.gov/press/Bpress/2009press/prb011309d.pdf
  6. U.S. Senate Roll Call Votes 111th Congress - 1st Session
  7. http://voices.washingtonpost.com/economy-watch/2009/01/geithner_by_senate.html?hpid=topnews
  8. Brian Knowlton, "Geithner Is Pressed for Bailout Details," New York Times February 11, 2009
  9. E. J. Dionne, "Centrism. Meh." The New Republic February 12, 2009
  10. http://www.washingtonpost.com/wp-dyn/content/article/2009/03/22/AR2009032201606.html
  11. http://online.wsj.com/article/SB123777083390610069.html
  12. http://www.nytimes.com/1985/06/09/style/carole-m-sonnenfeld-wed-to-t-f-geithner.html


Further reading



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