Posted on Mon, Jan. 26, 2009
last updated: January 26, 2009 08:14:24 PM
WASHINGTON — The U.S. Senate on Monday confirmed Timothy Geithner as treasury secretary, but only after Republicans expressed deep concern about his tax troubles and some Democrats raised questions about the financial-industry rescue plans he helped craft
The vote was 60-34.
Geithner, who was sworn in Monday night, will join the Obama economic team formally Tuesday, when the House of Representatives will begin to debate the $825 billion economic-stimulus package. A final House vote is likely Wednesday. The Senate will begin debate later this week.
Geithner has been largely absent from deliberations on Capitol Hill. He's been the president of the Federal Reserve Bank of New York since November 2003, and had been a rising star in Wall Street and Washington, drawing praise from lawmakers in both parties, until last month's revelation that he'd failed to pay self-employment taxes over a four-year period.
He wound up paying $34,000 in back taxes plus $8,000 in interest, saying that it was an honest mistake.
The nominee's tax problems, similar to those that dogged unsuccessful Cabinet nominees in the recent past, delayed his confirmation until after President-elect Barack Obama's inauguration. Some Democrats acknowledged that Geithner may not have been confirmed in less dire economic times, while Republicans were more explicit.
"I believe he is talented. I believe he is experienced. But that is not enough," because of his tax problems, said Sen. John Thune, R-S.D.
Republican senators' laments over Geithner's lapse dominated the brief debate.
"Our current economic crisis is in part a crisis of confidence," said Sen. Susan Collins, R-Maine. "Mr. Geithner's professional background and experience should inspire that confidence. They are overshadowed, however, by the personal issues regarding his own tax returns."
Supporters expressed similar regret, but noted that he's widely respected for his knowledge of the nation's financial system.
"While these mistakes have to some degree cast a shadow on Mr. Geithner's selection," said Sen. Orrin Hatch, R-Utah, "it is important that they not be allowed to overshadow his impressive credentials and the very real expertise that he will bring to this job."
Most Democrats were less inclined to criticize Geithner.
Senate Banking Committee Chairman Christopher Dodd, D-Conn., said that while he would "not minimize" the tax issue, he assured colleagues that, "This is, I believe, one of the most talented people I've met in the area of financial services."
Some Democrats did criticize Geithner, however, such as Sen. Tom Harkin of Iowa.
"I simply have not been able to overcome my very serious reservations about this nomination," Harkin said, explaining that he had trouble understanding why Geithner didn't pay some taxes.
As the president of the most powerful bank in the Federal Reserve system, because of its closeness to Wall Street and its interaction with central banks around the world, Geithner was heavily involved last year in the sale of investment bank Bear Stearns and the government bailout of insurance giant American International Group.
He also was instrumental in helping to shape the $700 billion Troubled Asset Relief Program, which has come under fire from lawmakers for being too generous to big banks while doing too little for smaller banks and consumers.
"Mr. Geithner has been involved in just about every flawed bailout action of the previous administration," said Sen. Jim Bunning, R-Ky. "He was the front-line regulator in New York when all the so-called financial innovations that have recently brought our markets to their knees became widespread."
Senators from both parties said Monday that it was essential that Geithner next would help lead an effort to make the financial-rescue program more efficient.
Dodd sharply criticized the Troubled Asset Relief Program, outlining conditions that recipients should meet, such as restrictions on bonuses to executives and limits on dividend payments.
Geithner addressed those concerns during his Senate Finance Committee confirmation hearing last week, giving few specifics. A typical response was one he gave Sen. Ron Wyden, D-Oregon, who asked him whether things could have been handled differently in 2007, when warning signs began to appear.
"Nobody who's been part of this system (can) look at this crisis and not be deeply, deeply uncomfortable by the failure of the basic checks and balances in our system," Geithner said. "And to fix this going forward, I believe, is going to require . . . very, very substantial reform."
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