By Jason Simpkins
Managing Editor
Money Morning
Timothy F. Geithner officially took over as U.S. Secretary of the Treasury after being confirmation from the Senate. Geithner is charged with the task of quelling the financial turmoil that has ravaged the U.S. economy and shepherding the United States out of a recession.
Geithner was sworn in as Treasury Secretary in the Cash room at the Treasury Department earlier today (Tuesday), with newly elected President Barack Obama at his side. The Senate confirmed Geithner's nomination, voting 60-34 in favor of his appointment despite a storm of controversy that stemmed from his inability to promptly pay $34,023 in self-employment taxes from 2001 to 2004.
"We are at a moment of maximum challenge for our economy and for our country," Geithner said. "In the world we confront today, Treasury has to be and Treasury will be a source of bold initiative."
There will be no shortage of obstacles during Geithner's tenure as Treasury Secretary. He inherits two potential time bombs in the financial and auto sectors - both of which have already received billions in taxpayer money but will almost certainly require even more.
With the housing market in disrepair and credit unavailable to consumers and businesses, consumer confidence is traversing record lows on a routine basis and retail sales have fallen sharply.
Finally, a total of 2.6 million jobs were lost in 2008 - the most since World War II - sending the country's jobless rate to 7.2%. The unemployment rate is expected to eclipse 8% by the end of 2009.
Geithner is acting quickly to prop up the faltering economy. Just hours after his confirmation the Treasury Department unveiled new rules to limit the influence of lobbyists seeking rescue funds from the $700 billion Troubled Asset Relief Program (TARP).
"American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system," said Secretary Geithner. "Today's actions reaffirm our commitment toward that goal."
One of Geithner's first and most important tasks will be deciding how the remaining $350 billion in TARP funds will be spent. He will likely offer more money to struggling financial firms, but the Obama administration has made it clear that recipients of the funds will be held more accountable.
"There's going to be a very different level of rigor in the evaluation of institutions," said Lawrence Summers, director of the National Economic Council. "The institutions that are healthy and don't need [the money] to survive are going to be expected to lend."
The Treasury also will consider a wide range of other measures including the establishment of a government bank, or "bad bank," to purchase toxic assets from financial firms, or the issuance of federal insurance on losses from those assets.
Geithner will also be crucial to the implementation of President Obama's $825 billion stimulus package. When not fielding questions about his tax returns, Geithner has been working with the rest of Obama's team to craft a stimulus package that focuses on job creation, infrastructure development, increased regulatory oversight, and tax relief for businesses and America's middle class.
The House Appropriations Committee has endorsed the plan and the House of Representatives has scheduled a full vote for Wednesday. Two Senate committees are set to take up the stimulus today.
News and Related Story Links:
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