Henry Blodget thinks it is time for Timothy Geithner to go. So far, Geithner's performance has been shockingly unimpressive. It's not as if he's walking into the crisis anew; he's been the head of the New York Fed for years, and dealing with these issues from the very beginning. Yet on the really crucial problem of what to do about the banking system, he's been very nearly silent, going to Congress with a non-plan-plan that terrified the very markets it was supposed to reassure. Blodget also has a point when he says that Geithner has been mysteriously stuck on his original ideas. I would add that he seems mysteriously stuck on them, but not willing to pay the political cost of executing them, which is the worst of both worlds.
On the other hand, though I've so far been underwhelmed by his performance, we can hardly fire him, because who on earth would replace him? The administration's vetting procedure has gotten entirely out of hand. Two candidates for Treasury slots have already withdrawn their candidacy in the face of the delays and Mossad-style interrogation procedures the candidates have to submit to.
The inability to get anyone confirmed has to be laid at the feet not of Geithner, but of Obama. We're in the biggest financial crisis in living memory, and the administration has so far failed to staff treasury because it is unwilling to take any political risk that a nominee will have a tax or a nanny problem.
These problems are simply the hazard of staffing a treasury department, which often involves people who have made enough money to have tax and nanny issues. And without those people, we cannot fix the banking system. The gigantic stimulus package that Obama passed will fall flat on its face, as contracting credit markets absorb the multiplier. That the Obama administration has been conserving political capital for its stimulus package and its budget, rather than its treasury nominees, is a radical misallocation of priorities.
In these circumstances, I find it hard to come
down too hard on Geithner for failing to come up with a newer, better
plan; he could hardly be expected to do so without any deputies or
staff to help.
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