There was no food at one of the “dinners,” which Geithner joked was an effort to keep the meeting shorter. He’s had roughly four of the dinners, which allow 10 to 20 of the economic principals and their top aides to thrash through options on banks and stress tests in a way that they never could with a one-hour meeting in the crush of the day.
Geithner, a former president of the New York Federal Reserve who once looked like he was floundering in one of the administration’s most scrutinized jobs, is emerging in a new position of strength with the media and the markets, just as he launches President Barack Obama’s high-stakes effort to re-regulate the nation’s financial markets.
“I came into this job without a lot of public exposure,” Geithner said in an interview in his office just down the block from the White House. “People want to see what you do over time. That’s the only way you get credibility, no matter what your reputation is.”
The secretary’s advisers acknowledge that his newfound political standing is tied, in part, to the state of the economy, which is now showing early signs of improvement. But Treasury officials also have updated their playbook after his Feb. 10 speech on financial recovery, which was panned by the press and blamed for a 381-point slide in the stock market.
They decided to “let Tim be Tim” and accepted the fact that his strength wasn’t giving a speech in front of a bunch of flags. Rather, they let reporters see him in off-camera, pen-and-pad settings, where he fielded questions with the confidence that his staff saw behind the scenes. He aced an interview with PBS’s Charlie Rose, thriving in a relaxed setting where he could explain issues at length.
Perhaps most important, the staff realized the importance of making sure other parts of the government knew all the nuances of what was being decided. Treasury officials now meet with White House chief of staff Rahm Emanuel three or four times a week, so top officials can coordinate and trade notes about views on Capitol Hill.
Although Obama never lost confidence in one of his earliest Cabinet picks, a turning point for Geithner came during a seven-hour marathon meeting at the White House on March 15. The president’s top aides could see that he had thought through all the options and had thoughtful, authoritative answers to all their questions.
The scathing Feb. 10 reviews were partly a result of an exhausted, overextended staff. But Geithner has had to work through a presidency’s worth of problems in just a few months.
Geithner likes to tell his staff, “Life is about choices.” And just about all the choices have been bad. As one top aide said about their daily dilemma: “In a less-than-ideal world, what’s the least bad choice we can make?”
The secretary has to go from a meeting about what to do about failing banks to another meeting about what the principles should be when the U.S. becomes the equity owner in a company — each a momentous policy decision that will be dissected for years to come.
“We’re changing the things that people couldn’t change for decades,” Geithner said.
It’s a time of transition for the department’s leadership, with more top vacancies being filled and Jake Siewert, a former White House press secretary during the Clinton administration, arriving next month as a senior counselor. Geithner is losing counselor Stephanie Cutter, who is heading over to the White House to help Obama’s soon-to-be-named Supreme Court nominee navigate Capitol Hill.
The secretary i about to face one of his biggest tests as the House and Senate step up work on the details of the White House’s call for more aggressive regulation of the financial markets — a move that once again could open up Obama and Geithner to charges that they want to put too much government control over the free market. One of Geithner’s hurdles is making sure the sense of urgency doesn’t fade as the economy stabilizes.
“When people feel very, very worried, you have a little bit more receptivity to action,” Geithner said. “When they start to feel better, that impetus for change fades a bit. That’s a risk for us.”
Also on Geithner’s to-do list: finessing regulations on executive compensation; developing rules on how banks can repay bailout money, as Goldman and J.P. Morgan want to; and making changes — including more government money — to give private investors an incentive to help buy out banks’ “toxic assets.”
Any one of those could easily turn sour on Geithner — if Wall Street rebels against his push to rein in executive pay packages, or if he sinks too much government cash into a public-private plan.
Geithner was used to being a behind-the-scenes player, but suddenly he was the public face of Obama’s economic plan. The markets demanded a quick fix, and his plans were built for the long haul. The problems came to a head with the American International Group bonus scandal, with public anger focused partly on Geithner, whose Treasury Department had initially said there was nothing it could do legally to stop them.
“All of the inside-the-Beltway pols, and I’m one of them, thought he was toast,” said one Republican financial lobbyist who asked not to be named. “He has weathered storms that would have sunk the boat of many other people.”
Asked whether he should have done more to head off the AIG bonus fracas, Geithner now says: “I really believe we had no good choices. And it wouldn’t have changed the outcome, because we had a set of contractual commitments made long before the government got involved.”
Fred Malek, a Republican financier, said Geithner looks as if he is on solid ground, in part because “it would be very inadvisable to switch generals in the middle of an economic war.”
“He should be judged less on politics and style than on the actual results achieved,” Malek said.
The Republican financial lobbyist added: “His speeches are boring, but they’re supposed to be boring. He’s the secretary of the treasury.”
Scott Talbott, senior vice president for government affairs at The Financial Services Roundtable, said Geithner has “gotten his political legs under him” and pointed out that it’s always difficult to come from outside to face the real-world politics of Washington.
“He’s begun to navigate the moving pieces of three-dimensional chess in Washington,” Talbott said. “This is an extraordinary time. There’s no blueprint, and he’s operating without a net.”
Then Talbott pointed to what may be Geithner’s real ace in the hole: “He’s one of a small, select group of people who could even be treasury secretary right now. If not him, who else?”