Barack Obama’s nomination of Timothy Geithner for Treasury Secretary, and the circumstances surrounding it, have raised many issues and questions — not only about the nominee himself, but also about senators and others reviewing it, the media’s coverage, and ultimately his presumptive boss’s leadership.
Here are the top ten disturbing aspects of the Geithner nomination, not in order of importance until number one.
10. His performance in his previous job
Geithner became president of the Federal Reserve Bank of New York in 2004. The New York Fed’s “about” page says that one of its duties is “to ensure a safe and sound banking system,” and that it “conducts onsite and offsite examinations of banks in New York, New Jersey, and Fairfield County in Connecticut.” Since so many major financial institutions are under the New York Fed’s jurisdiction, Geithner’s New York Fed has an outsized role in ensuring the soundness of the banking system nationwide.
But in the same November 24 New York Times article that describes him as “a 47-year-old wonder boy,” reporter Andrew Ross Sorkin quotes several anonymous Wall Street CEOs who “question whether he’s up to the challenge.” His roles in managing the unravelings at Bear Stearns, AIG, and Merrill Lynch, the bankruptcy at Lehman, and the ongoing implosion at Citigroup deserve scrutiny. They appear to be getting none.
Beyond that, the suddenness of these collapses should lead nomination-vetting senators to question the quality of and follow-up relating to “examinations” done on Geithner’s watch. Can the money center blowups be traced to years of inadequate oversight?
9. His role in the Troubled Asset Relief Program (TARP)
Within days of its enactment by Congress, TARP, now fully funded by Congress to the tune of $700 billion, morphed from the asset-buying program originally advertised to one of direct, “(figurative) gun to the head” investments in banks. Geithner was a key behind-the-scenes player in all of this — Sorkin called him “the point person for weeks of sleep-deprived bailout weekends.”
To what extent is Geithner responsible for the schizophrenic, misleading, and confidence-shaking mishandling of what I have been calling the SUCKUP (Seemingly Unlimited Cash Kitty Under Paulson)?
8. Likely tax evasion, not “mere” avoidance
“Wonder boy” Geithner failed to pay $34,000 in self-employment taxes on his earnings at the International Monetary Fund from 2001 through 2004, even though the IMF partially reimbursed him for these taxes each year.
The IRS caught his (cough, cough) “honest mistake” in 2006 and made Geithner pay up for 2003 and 2004. But he didn’t do so for 2001 and 2002 until just before Barack Obama nominated him. Why? Because the three-year statute of limitations, based on when a return is filed, had expired for those two years.
But the statute of limitations does not apply “in the case of a false or fraudulent return with intent to evade any tax.” Given that he had tax problems going back to 1993 over paying taxes on wages paid to domestic help, it should be obvious that Geithner knew full well when he filed his 2001 and 2002 returns that Uncle Sam demands his 15.3% for Social Security and Medicare no matter where and for whom you work inside the U.S. Thus, I believe that he knowingly filed false returns, engaging in tax evasion, not avoidance.