Obama says Geithner job is safe

With public outrage over the AIG bonus scandal mounting and several politicians calling for Geithner’s resignation, Obama was forced this week to repeatedly defend his treasury secretary, saying he had his complete confidence.

Repeated defence

While Obama has said Geithner’s job is safe, some Washington pundits have noted it is not a good sign that the president has had to say it, and so often.

Thomas Palley, a Washington-based economist, told Al Jazeera that juding by the reception in the [US] media, Geithner’s performance has been “pretty weak”.

“He [Geithner] doesn’t seem to have inspired. My own opinion is that Timothy Geithner is a very capable bureaucrat and he is carrying out the mission that he has set – that’s president Obama’s mission,” he said.

“The question is: Who is providing the deep thinking about the economic architecture? He is not an economist; president Obama is not an economist.

“So who is providing the economic thinking? I don’t think there has been much imagination. There has not been much willingness to challenge the existing arrangements for the reasons that I have already said.

“I think that the economic profession and leading economists are very interested in the current system and do not want to change it.”

The odds on whether Geithner will leave by the end of June increased over the last week in the intrade political prediction market, although traders still gave it only a small chance of happening.

Obama stressed in the “60 Minutes” interview, which will be broadcast on Sunday, that neither he nor Geithner had discussed the possibility of his quitting, CBS said in a statement on Saturday.

Geithner said this week he took full responsibility for the controversy surrounding the AIG bonuses and dismissed calls for his resignation, saying it “just comes with the job”.

Toxic assets

Geithner, who has been in his job less than two months, has also faced criticism over his slow roll-out of plans to save the banking sector, which Obama said this week was key to staving off further financial calamity.

A source familiar with the bank bailout plan told Reuters on Saturday the Treasury Department would unveil a program next week aimed at cleansing toxic assets from bank balance sheets that have frozen up lending and fueled the recession.

The keenly awaited plan proposes setting up an entity the Federal Deposit Insurance Corp will use to offer low-interest loans to private interests for buying up banks’ soured assets, many of which are tied to mortgages and have tumbled in value.

The Treasury Department will also hire outside investment managers to run public-private partnerships that could invest for potential profit in troubled mortgages, with government capital matching private capital contributions.