Geithner on the defensive in his big debut

WASHINGTON (Reuters) - The first question that new Treasury Secretary Timothy Geithner faced on Tuesday after delivering his plan for fixing the banking system was whether his neck was on the line.

Two weeks into his tenure, Geithner already finds himself on the defensive as he tries to convince the world that he is up to the challenge of repairing the U.S. economy without squandering public money or enriching bankers.

His first big policy speech was greeted by a sell-off on Wall Street and a series of sometimes awkward television interviews that contained almost as many questions about Geithner himself as the plan he had just announced.

Just before its interview with Geithner, CNBC ran a headline questioning whether his neck was on the line, and then asked him to respond to a commentator's assessment that the Treasury secretary was "really kind of a disaster."

It was a chilly reception for a man who was considered so perfectly suited for the Treasury job that Congress was willing to overlook his embarrassing failure to pay certain taxes and confirm his appointment anyway.

Like his predecessor, Henry Paulson, Geithner seems to be more popular with investors in theory than in practice.

Much as Paulson was well received on Wall Street because of his years at Goldman Sachs, Geithner's experience as head of the New York Federal Reserve Bank made him a popular pick. Stocks soared when word leaked out in November that he would get the job.

Now Geithner is drawing the same sort of criticism that dogged Paulson for much of last year -- namely that he failed to produce a comprehensive and quick plan for shoring up the financial system.

"We did not see convincing evidence that the government is moving away from its Band-Aid approach to helping banks," said Axel Merk, chief investment officer of Merk Investments.

PLAYING POLITICS

Unlike Paulson, Geithner's path to the Treasury was through the public sector, including stints at the International Monetary Fund and Treasury.

Although he spent many years in Washington, he operated largely outside the political glare until now. His first taste of that spotlight came during the Senate confirmation process, when he faced tough questions about why he failed to pay taxes. Roughly a third of the Senate voted against his nomination.

Brian Bethune, chief U.S. financial economist at IHS Global Insight, said Geithner still seemed to be struggling to find the right balance of policy and politics, and questioned why Sen. Christopher Dodd, the Connecticut Democrat who chairs the Senate Banking Committee, introduced him on Tuesday.

"The speech had too many political overtones and the politically charged preamble by Sen. Dodd did not set the stage appropriately," Bethune said.

Some of Geithner's soft handling of Congress may be the consequence of its rocky relationship with Paulson.

Paulson irked lawmakers last year when he asked for a $700 billion bailout fund and offered just a three-page explanation for why such a huge sum of money was needed. When the money was eventually approved, he made matters worse by repeatedly changing the way the Treasury spent it.

That also may explain why Geithner did not unveil his rescue plan as quickly as Wall Street would have liked, and also why it contained so few specifics. Geithner made it clear that he would "consult closely" with Congress on the plan.

He didn't waste any time on that front. Hours after giving his policy speech, Geithner was testifying before Dodd's banking committee.

That may be the friendliest group he faced all day.

(Editing by Jonathan Oatis)