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Tim Geithner: Too Close to Goldman Sachs to Be Treasury Secretary, Critic Says

Posted Jan 21, 2009 12:22pm EST by Aaron Task in Newsmakers, Banking
Related: GS, C, BAC, XLF, MS, JPM, ^DJI

Tim Geithner apologized for not paying his taxes and some Republicans criticized his involvement in the TARP program at today's hearing, but Barack Obama's nominee for Treasury Secretary appears on track for confirmation.

Congress is "all in a panic" and "really clueless" about this all-important member of Obama's cabinet, says Christopher Whalen, managing director and co-founder of Institutional Risk Analytics. "I'm just not sure Tim Geithner is the guy we should have driving the bus."

Beyond his tax gaffe, which will mainly serve to politically weaken Obama's pick, Whalen says Geithner is the wrong many for the job because of his decision-making as President of the New York Fed.

"I believe Tim Geithner only represents part of Wall Street - Goldman Sachs," he says, suggesting Goldman was the "primary beneficiary of the AIG bailout" and notes Goldman alum Stephen Friedman serves on the board of the NY Fed. (Hank Paulson and Robert Rubin, with whom Geithner had frequent meetings in the past year, are also Goldman alum.)

Whalen further questions the inconsistency of the Fed's decision to rescue Bear Stearns - in the end, their debt and shareholders got something - while letting Lehman Brothers "go to hell." 

In the end, Whalen says he'll fully support Geithner if and when he's confirmed: "We have to be successful," he says. "This is not about personality." 

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