| WASHINGTON, March 18
WASHINGTON, March 18 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
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
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
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
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)