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Geithner gets Obama's backing amid AIG, staff woes
WASHINGTON, March 18 |
WASHINGTON, March 18 (Reuters) - President Barack Obama voiced confidence in U.S. Treasury Secretary Timothy Geithner for the second day in a row on Wednesday amid criticism over the government's handling of American International Group's bonuses and lingering delays in filling key Treasury jobs.
"I have complete confidence in Tim Geithner and my entire economic team," Obama said with Geithner at his side on the White House South Lawn.
"Nobody's working harder than this guy. You know, he is making all the right moves in terms of playing a bad hand," Obama said before boarding his Marine One helicopter to start a trip to California.
The show of support came as Geithner absorbed some of the lawmaker and public outrage over AIG's (AIG.N) payment of $165 million in retention bonuses on Sunday to employees of the unit that made bad bets on toxic mortgages and credit default swaps, triggering multiple U.S. bailouts now totaling $180 billion.
On Tuesday, White House spokesman Robert Gibbs also said Obama was confident in Geithner.
U.S. lawmakers, particularly Republicans, were not so supportive. Rep. Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, called for his resignation.
"Secretary Geithner either didn't know about the bonuses and was grossly negligent, or he did know and failed to bring this to the president's attention," Issa said. "Either way, the end result has been a significant waste of taxpayer dollars and he should take immediate responsibility and resign."
At a U.S. House of Representatives hearing on the AIG bonuses on Wednesday, protesters waved signs reading "Fire Geithner."
AIG Chief Executive Edward Liddy told lawmakers that Geithner knew about the bonus problem two weeks ago, but a U.S. Treasury spokesman contradicted this, saying Geithner did not learn of the problem until March 10.
Geithner also has faced criticism over his methodical approach to developing plans to clear problem assets off of bank balance sheets.
Lack of detail in an initial outline in February caused a major drop in financial stocks. Now, the controversy over AIG has some private investors rethinking their willingness to participate in a public-private investment fund to buy troubled assets.
Other Republicans were not ready to jettison the Treasury secretary, but gave him low marks for his work in his less than two months on the job.
"I don't have a lot of confidence in what Treasury's doing up to now in dealing with our banking system," said Sen. Richard Shelby of Alabama, the ranking Republican on the Senate Bnaking Committee.
But Geithner, who faces a major test in coming days when he reveals more details about the bank asset plan, drew support from other lawmakers on Wednesday.
"I think he's been doing a very good job. I think things like, for instance, the foreclosure issue, he's handled very well," said Rep. Barney Frank, the Democratic chairman of the influential House Financial Services Committee. "He inherited a tough situation."
The bank asset plan has been hampered by delays in filling key positions at the Treasury, including deputy secretary and undersecretaries for domestic finance and international affairs. Geithner himself remains the only Treasury nominee to be confirmed by the U.S. Senate.
He has been developing policy with a close circle of advisers and is bringing on additional help. On Wednesday, people familiar with the matter said Citigroup (C.N) chief economist Lewis Alexander will join the Treasury as another counselor to Geithner. Alexander was an economist at the Federal Reserve and the U.S. Commerce Department in the 1990s.
These people also said that Lael Brainard, a former White House economic adviser in the Clinton administration who is now director of global economy and development at the Brookings Institution, in Washington, is being vetted for nomination as undersecretary for international affairs.
As if he needed more on his plate, Geithner also is working on a package of financial regulatory changes aimed at reducing systemic risk and giving the government new powers to unwind failing non-bank financial institutions. Obama administration officials said the plan, called for closing gaps in oversight and stronger investor protections. (Additional reporting by John Poirier, Kevin Drawbaugh, Corbett Daly, Thomas Ferraro and Caren Bohan, writing by David Lawder; Editing by Leslie Adler)
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