Timothy Geithner

The Honorable Timothy Geithner
75th United States Secretary of the Treasury
In office January 26, 2009 – January 25, 2013
President	Barack Obama
Deputy	Neal S. Wolin
Preceded by	Henry Paulson
Succeeded by	Jack Lew
9th President of the Federal Reserve Bank of New York
In office November 17, 2003 – January 26, 2009
Preceded by	William Joseph McDonough
Succeeded by	William C. Dudley
United States Under Secretary of the Treasury for International Affairs
In office 1998–2001
President	Bill Clinton
Personal details
Born	Timothy Franz Geithner (1961-08-18) August 18, 1961 New York City, New York, U.S.
Political party	Independent[1]
Spouse(s)	Carole Marie Sonnenfeld (1985–present)
Children	2
Alma mater	Dartmouth College Johns Hopkins University
Signature
Website	Government website

Timothy Franz "Tim" Geithner (/ˈɡaɪtnər/; born August 18, 1961) is a former American economic policy maker and central banker who served as the 75th United States Secretary of the Treasury, under President Barack Obama, from 2009 to 2013, now employed in the private sector. He was previously the president of the Federal Reserve Bank of New York from 2003 to 2009. He now serves as president of Warburg Pincus, a Wall Street private equity firm.^[2]

Geithner's position included a large role in directing the Federal Government's spending on the crisis, including allocation of $350 billion of funds from the Troubled Asset Relief Program enacted during the previous administration. At the end of his first year in office, he continued to deal with multiple high visibility issues, including administration efforts to restructure the regulation of the nation's financial system,^[3] attempts to spur recovery of both the mortgage market and the automobile industry, demands for protectionism, President Obama's tax changes, and negotiations with foreign governments on approaches to worldwide financial issues.^[4][5]

Family and education

Geithner was born in New York City, son of Peter Franz Geithner and his wife Deborah Moore. His father was the director of the Asia program at the Ford Foundation in New York in the 1990s. Geithner's father is a German American. Geithner's paternal grandfather, Paul Herman Geithner (1902–1972), immigrated to the United States in 1908 with his parents from Zeulenroda, in Thuringia.

Geithner's mother, a Mayflower descendant, belongs to a New England family.^[6] Her father, Charles Frederick Moore, Jr., was an adviser to President Dwight D. Eisenhower and served as Vice President of Public Relations from 1952 to 1964 for Ford Motor Company.^[7]

Geithner spent most of his childhood living abroad, including Zimbabwe, Zambia, India, and Thailand, where he completed high school at the International School Bangkok.^[8] He attended Dartmouth College, as did his father and paternal grandfather, graduating in 1983 with an A.B. in government and Asian studies.^[8] He studied Mandarin at Peking University in 1981 and at Beijing Normal University in 1982.^[9] and earned an M.A. in international economics and East Asian studies from Johns Hopkins University's School of Advanced International Studies in 1985.^[8][10] He has also studied Japanese.^[11]

Geithner married Carole Marie Sonnenfeld, his classmate at Dartmouth, on June 8, 1985, at his parents' summer home in Orleans, Massachusetts.^[12] She is a Licensed Clinical Social Worker and an Assistant Clinical Professor of Psychiatry and Behavioral Sciences at George Washington University School of Medicine, where she teaches listening skills to medical students.^[13] She is the children's author of a coming-of-age novel about grief.^[14] Her father, Albert Sonnenfeld, was a professor of French and Comparative Literature and a food critic;^[15] her mother, Portia, died when Carole was 25, shortly after she was married. They have two adult children, a daughter named Elise and a son named Benjamin.^[16]

Finance Minister (later President) of India Pranab Mukherjee with Secretary of the Treasury Tim Geithner at Washington, D.C. in 2010.

During the early 1980s, Geithner's father oversaw the Ford Foundation's microfinance programs in Indonesia being developed by Ann Dunham Soetoro, President Barack Obama's mother, and they met at least once.^[17]

Early career

Geithner worked for Kissinger Associates in Washington for three years and then joined the International Affairs division of the U.S. Treasury Department in 1988. He went on to serve as an attaché at the Embassy of the United States in Tokyo. He was deputy assistant secretary for international monetary and financial policy (1995–1996), senior deputy assistant secretary for international affairs (1996–1997), and assistant secretary for international affairs (1997–1998).^[10]

He was Under Secretary of the Treasury for International Affairs (1998–2001) under Treasury Secretaries Robert Rubin and Lawrence Summers.^[10] Summers was his mentor,^[18][19] but other sources call him a Rubin protégé.^[20][21][22]

Treasury Secretary designee Geithner meets then-Finance Committee Chairman Max Baucus on November 25, 2008

In 2001 he left the Treasury to join the Council on Foreign Relations as a Senior Fellow in the International Economics department.^[23] He was director of the Policy Development and Review Department (2001–2003) at the International Monetary Fund.^[10]

In October 2003, at age 42,^[24] he was named president of the Federal Reserve Bank of New York.^[25] His salary in 2007 was $398,200.^[26] As President of the New York Fed, he served as Vice Chairman of the Federal Open Market Committee. In 2006, he also became a member of the Washington-based financial advisory body, the Group of Thirty.^[27] In May 2007, he worked to reduce the capital required to run a bank.^[24] In November he rejected Sanford Weill's offer to take over as Citigroup's chief executive.^[24]

In March 2008, he arranged the rescue and sale of Bear Stearns.^[18][28] As a Treasury official, he helped manage multiple international crises of the 1990s^[21] in Brazil, Mexico, Indonesia, South Korea, and Thailand.^[22]

Geithner believed, along with Henry Paulson, that the U.S. Department of the Treasury needed new authority to experiment with responses to the late-2000s (decade) financial crisis.^[18] Paulson described Geithner as a "very unusually talented young man...[who] understands government and understands markets".^[28]

Secretary of the Treasury

Nomination and confirmation

Geithner was sworn in as Treasury Secretary on January 26, 2009

During the 2008 Presidential election, Geithner was one of three people tipped to be nominated for Treasury Secretary regardless of whether John McCain or Barack Obama won.^[1] On November 24, 2008, President-elect Barack Obama announced his intention to nominate Geithner to be Treasury Secretary.^[29][30]

During his confirmation, it was disclosed that Geithner had not paid $35,000 in Social Security and Medicare payroll taxes from 2001 through 2004 while working for the International Monetary Fund.^[31] The IMF, as an international agency, did not withhold payroll taxes, but instead reimbursed the usual employer responsibility of these taxes to employees. Geithner received the reimbursements and paid the amounts received to the government, but had not paid the remaining half which would normally have been withheld from his pay. The issue, as well as other errors relating to past deductions and expenses, were noted during a 2006 audit by the Internal Revenue Service^{[32][33][34][35]} Geithner subsequently paid the additional taxes owed.^[36][37] In a statement to the Senate Finance Committee, Geithner called the tax issues "careless," "avoidable," and "unintentional" errors.^[36] Geithner testified that he used software to prepare his 2001 return, but that the tax errors were his own responsibility.^[38][39]

On January 26, 2009, the U.S. Senate confirmed Geithner's appointment by a vote of 60–34.^[40][41] Geithner was sworn in as Treasury Secretary by Vice President Joe Biden and witnessed by President Barack Obama.^[42]

Bank bailout

Geithner speaking at the United States Department of Treasury.

Geithner had 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 was not mandated to seek Congressional approval, but went to Congress on February 10–11, 2009 to explain his plans. Under the Financial Stability Plan, he proposed to create a new investment fund to provide a market for the legacy loans and securities—the so-called “toxic assets”—burdening the financial system, using a mix of taxpayer and private money.^[43] He also proposed 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 proposed 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.^[44][45] The plan was criticized by Nobel Prize–winning economist Paul Krugman^[46] as well as fellow Nobel laureate and former World Bank Chief Economist Joseph Stiglitz.^[47]

The "Bank Bailout", that is the TARP and Fanny and Freddy bailouts combined, had an outflow of $615 billion in funds from the US Treasury. As of June 2015 the inflow to the US Treasury from those institutions was $670 billion. In the end, the "Bank Bailouts" turned a profit to the US treasury. ^[48]

AIG bonuses

Although President Obama expressed strong support for Geithner, the outrage over the AIG bonuses undermined public support. AIG paid bonuses to executives in its Financial Services division after receiving more than $170 billion in federal bailout aid.^[49] Even prior to the election, senior aides to Timothy Geithner had 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 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.^[50]

AIG payments to banks

In November 2009, Neil Barofsky, the Treasury Department Inspector General responsible for oversight of TARP funds, issued a report critical of the use of $62.1 billion of government funds to redeem derivative contracts held by several large banks which AIG had insured against losses. The banks received face value for the contracts although their market value at the time was much lower. In the report, Barofsky said the payments "provided [the banks] with tens of billions of dollars they likely would have not otherwise received". Terms for use of the funds had been negotiated with the New York Federal Reserve Bank while Geithner was president.

In January 2010, Rep. Darrell Issa released a series of e-mails between AIG and the New York Fed. In these e-mails, the Fed urged AIG not to disclose the full details of the payments publicly or in its SEC filings. Issa pushed for an investigation of the matter, and for records and e-mails from the Fed to be subpoenaed. Rep. Edolphus Towns, Chairman of the House Oversight and Government Reform Committee, issued subpoenas for the records and scheduled hearings for late January. Federal Reserve Chairman Ben Bernanke said the Fed would welcome a full review of its actions regarding the AIG payments.^{[51][52][53][54]}

Geithner and his predecessor, former Treasury Secretary Henry Paulson, both appeared before the Committee on January 27. Geithner defended the bailout of AIG and the payments to the banks, while reiterating previous denials of any involvement in efforts to withhold details of the transactions. His testimony was met with skepticism and angry disagreement by House members of both parties.^{[55][56][57][58]}

China

Geithner with Secretary of State Hillary Clinton at the opening session of the first U.S.–China Strategic and Economic Dialogue on July 27, 2009

In written comments to the Senate Finance Committee during his confirmation hearings, Geithner stated that the new administration believed China was "manipulating" its currency and that the Obama administration would act "aggressively" using "all the diplomatic avenues" to change China's currency practices.^[59] The Obama administration would pressure China diplomatically to change this practice more strongly than the George W. Bush Administration had done.^[60] The United States maintained that China's actions hurt American businesses and contributed to the financial crisis.^[61]

Shortly after assuming his role as Secretary of the Treasury, Geithner met in Washington with Chinese Foreign Minister Yang Jiechi. He told Yang that the U.S. attached great importance to its relations with China and that U.S.–China cooperation was essential in order for the world economy to fully recover.^[62]

On June 1, 2009, during a question-and-answer session following a speech at Peking University, Geithner was asked by a student whether Chinese investments in U.S. Treasury debt were safe. His reply that they were "very safe" drew laughter from the audience.^[63][64]

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

Opposing extension of tax cuts

In summer 2010, The New York Times said Geithner "is President Obama’s point man in opposing the extension of the Bush tax cuts for the wealthy after their Dec. 31 expiration. ... [Geithner] has cited the projected $700 billion, 10-year cost of the tax cuts, and nonpartisan analyses that they do not stimulate the economy because the wealthy tend to save the additional money rather than spend it. 'I believe there is no credible argument to be made that the purpose of government is to borrow from future generations of Americans to finance an extension of tax cuts for the top 2 percent,' [he] said in a recent speech."^[65]

Fiscal cliff and debt limit negotiations

Geithner was Obama's lead negotiator about the fiscal cliff and the increase in the 2013 debt limit.^[66][67] For example, on December 5, 2012, Geithner confirmed leaks from the White House,^[68][69][70] Treasury Secretary Geithner told CNBC that the Obama Administration is "absolutely" willing to go over the fiscal cliff if Republicans refused to back off from their opposition to raising rates on wealthier Americans.^[71][72]

Criticism

Geithner weathered criticism early in the Obama presidency, when Congressman Connie Mack (R-FL) suggested he should resign over the AIG bonus scandal, and Alabama Senator Richard Shelby said that Geithner was "out of the loop". Democrats largely joined Obama in supporting Geithner, and there was no serious talk of him losing his job.^[73]

In November 2009, Oregon Representative Peter DeFazio, speaking for himself and some fellow members of the Progressive Caucus, 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.^[74] When Geithner appeared in front of the Congressional Joint Economic Committee that month, the ranking House Republican, Kevin Brady of Texas, 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.^[75]

In June 2011, The New Republic criticized Geithner from the left, arguing that he was and is overly concerned with the deficit at a time, following the Great Recession, the government should be pursuing stimulus; and as a result, it is possible that the stimulus was smaller than it could have been.^[76]

Career after the Treasury

Geithner left the administration on January 25, 2013.^[77][78]

After leaving office, Geithner wrote a memoir of his time serving as Secretary of Treasury entitled Stress Test: Reflections on Financial Crises,^[79] published in May 2014.

In November 2013, it was announced that Geithner would join the private equity firm Warburg Pincus as president and managing director in March 2014.^[2]

Media

Geithner was portrayed by Billy Crudup in the HBO film Too Big to Fail.

Memberships

• Center for Global Development (Board of Directors)^[80]
• Council on Foreign Relations^[23]
• Economic Club of New York (trustee)^[80]
• Bank for International Settlements, Committee on payment and settlement systems (chairman) ^[10]
• Bilderberg Group

Published works

• Geithner, Timothy (2014). Stress Test: Reflections on Financial Crises. Crown Publishing Group, Random House. ISBN 9780804138598. 

References

Further reading

• Anderson, Jenny (2007-02-09). "Calm Before and During a Storm". The New York Times. 
• Cho, David; Irwin, Neil (2008-09-19). "In Crucible of Crisis, Paulson, Bernanke, Geithner Forge a Committee of Three". The Washington Post. 
• Schreiber, Noam (2008-11-05). "Obama's Choice: The next Larry Summers… or Larry Summers". The New Republic. 
• Judis, John B. (2009-03-23). "The Geithner Disaster: How The Treasury Secretary Is Undermining Obama's Entire Economic Agenda". The New Republic. 
• Stewart, James B., "Eight Days: the battle to save the American financial system", The New Yorker magazine, September 21, 2009.
• Cassidy, John (15 March 2010). "Annals of Economics: No Credit". The New Yorker 86 (4): 26–30. Retrieved 15 January 2011. 

External links

• Biography at the United States Department of the Treasury
• Timothy Geithner collected news and commentary at The Washington Post
• Appearances on C-SPAN
• Timothy Geithner collected news and commentary at The New York Times
• Works by or about Timothy Geithner in libraries (WorldCat catalog)
• Biography at the Federal Reserve Bank of New York
• "Who’s Who: The Federal Open Markets Committee", msnbc.com
• "Bernanke's quiet skipper makes waves", MarketWatch
• "Toxic Assets Reduction Plan", The Justice Dept: March 23, 2009.
• "Liquidity Risk and the Global Economy", International Finance, Summer 2007
• "Geithner's Calendar at the New York Fed". The New York Times. April 26, 2009. Retrieved April 26, 2009.  (2007–2009)
• Stewart, James (September 14, 2009), "Eight Days", The New Yorker, pp. 58–81, summary of occurrences in the eight days September 15–23, 2008, with interviews of Paulson, Bernanke, and Geithner

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