For the last year, Timothy F. Geithner has been at the very heart of dealing with the financial crisis, the junior partner with Treasury Secretary Henry M. Paulson Jr. and Ben S. Bernanke, chairman of the Federal Reserve. Together, they scrambled to save Bear Stearns, American International Group and Citigroup, while letting Lehman Brothers fail.
Now Geithner, youthful president of the Federal Reserve Bank of New York and President-elect Barack Obama’s choice for Treasury secretary, will be thrust from go-between to the head of the table. He will graduate from team player to team captain, steering the new administration’s economic policies and its plan to rescue the financial system.
The two-month wait until Obama takes office could be awkward, so much so that people who know Geithner say he may step down from the New York Fed within a few weeks. That would give him an early start in developing a stimulus plan, which Obama’s aides say they are coordinating with Democratic leaders in Congress and hope to pass before the inauguration.
Geithner’s immersion in the critical events of the crisis and his close ties to Paulson and Bernanke, both appointees of President Bush, will provide a vital sense of continuity for the rescue effort, Obama indicated on Monday in Chicago.
“Tim will waste no time getting up to speed,” Obama said in announcing his intention to nominate Geithner. “He will start his first day on the job with a unique insight into the failures of today’s markets and a clear vision of the steps we must take to revive them.”
Experts said Geithner would have to make a series of difficult decisions, in quick succession, about how to proceed with a rescue effort that has been marked by political tension, reversals and a growing sense of confusion, as Paulson appears to be hostage to events.
And he will have to do this in the vortex of a deepening economic crisis, at home and abroad, that could limit his options. Though Geithner, 47, cut his teeth in past crises, most overseas, economists who know him say little could have prepared him for the magnitude of responsibility he is assuming.
“It’s hard to think of a moment in history where a new Treasury secretary has started in this position,” said Kenneth S. Rogoff, a professor of economics at Harvard. “It’s a position of incredible responsibility. He really has to reshape the financial system, on the run.”