The rally saved Geithner
The general sense is that Geithner was on the edge of losing his authority if not his position, particularly given the poor reviews for his earlier plan, which were seen as light on details in both Washington and on Wall Street. That led some Washington insiders, and of course a few economic conservatives and Republicans, to call for Geithner to resign.
Geithner's status is now as strong as any member of President Obama's cabinet. Let's put on the old political science hat to detail why Geithner has President Obama's full confidence:
- Public policy: Geithner is highly intelligent, experienced, and understands all of the key linkages in the financial system. He is a critical sources, from knowledge, continuity, and financial stability standpoints. He also understands that loosening credit markets and stabilizing major banks requires many levers, and equally significant, time: it's not going to happen overnight. But so far, it looks like financial markets are inching back toward health.
- Practicality: Obama has no one else with Geithner's background, connections and skills who could seamlessly step into the role as Treasury Secretary.
- Politics: The notion that President Obama would remove Geithner, from a political standpoint, is categorically absurd. If Obama did that he would have essentially acquiesced to a baseless, ideologically-driven Republican attack from a party that has very little economic credibility. To date, the Republican Party's policy response to the crisis has been to vote 'no' and to hope that Obama's reforms fail. That's not the stuff of governance, and the American people, and of course Obama, see right through it, which is one reason Obama's approval rating remains high.
Political & Economic Analysis: For public policy, practical, and political reasons, Geithner's standing and relationship with President Obama is very strong. True, Geithner does need to communicate the administration's overall financial system recovery strategy better, and he got off to good start on that front during his battery of media interviews Monday. That improvement, plus the toxic asset plan's likely effectiveness, in conjunction with other financial system stabilization programs, point to Treasury Secretary Geithner serving the public for a long time.
Financial Editor Joseph Lazzaro is writing a book on the U.S. Presidency and the U.S. economy.