SNAP ANALYSIS: Geithner to be Treasury pick for crisis

WASHINGTON (Reuters) - U.S. President-elect Barack Obama wants Timothy Geithner, New York Federal Reserve Bank president, to take over as Treasury secretary to lead his government's efforts to fight the financial crisis.

Geithner, 47, was always as a top contender for the post.

He has worked closely with current Treasury Secretary Henry Paulson as stricken Wall Street firms merged, collapsed and transformed into bank holding companies, helping broker many of the deals from his New York Fed office.

WHAT KIND OF TREASURY SECRETARY WOULD HE BE?

* Geithner shuns the limelight but is a known entity on Wall Street; he has been tested under fire after handling the turmoil at Bear Stearns, Lehman Brothers and AIG.

* He seemed irritated at times while testifying on the credit crisis before Congress but is no stranger to Washington after stints at Treasury and the International Monetary Fund.

* Chris Rupkey, senior economist at the Bank of Tokyo-Mitsubishi called him "battle-tested" from his time working with former Treasury secretaries Robert Rubin and Lawrence Summers, and said he would "hit the ground running as he has been fighting the global credit crisis began in 2007."

* His expertise on Asia may also serve him well. He has studied Japanese and Chinese, lived in India, Thailand, China, and Japan and played a key role in the Clinton administration's efforts battling the Asian financial crisis in the late 1990s.

One tough task could be to convince Japan and China to keep buying U.S. Treasuries as debt issuance soars next year. Foreign buyers help to keep U.S. borrowing costs low and are vital to financing a fast-growing deficit.

* The knocks against Geithner stem mostly from criticism that the Treasury and Federal Reserve mishandled the failure of Lehman Brothers. "The con is he was instrumental in the decision to bankrupt Lehman Brothers, a decision that is seen by many as the domino that set off the chain of events which culminated in the $250 billion bank rescue so far," said Christopher Low, chief economist at FTN Financial.

* Geithner is used to working with U.S. Federal Reserve Chairman Ben Bernanke, a key job for the Treasury secretary. Some on Wall Street have said in recent weeks that Bernanke and Paulson didn't always seem to be on the same page.

WHAT'S NEXT FOR THE NEW YORK FED?

* The New York Fed has an active role in oversight of financial and bond markets. Geithner has said the Fed should play an important part in supervising any financial institutions that can tap the Fed's lending facilities so that the Fed could keep close watch on whether markets are functioning smoothly.

* The New York Fed president is vice chairman of the Fed's policy-setting Federal Open Market Committee and always has a vote on interest rates unlike other Fed bank presidents.

* The New York Fed is the central bank's link to Wall Street and financial markets. It manages the Fed's interest rate target by trading Treasury securities with primary dealers.

* Geithner has said the ambiguous quasi-governmental status of mortgage finance enterprises Fannie Mae and Freddie Mac must change. "The current balance is probably untenable over the longer term," he said in July.

* If confirmed, he would play a key role in Obama's decision whether or not to reappoint Bernanke.

* Regional Fed banks have frequently replaced leadership from within, but the New York Fed has often looked outside. Following are some possible successors:

-- New York Fed First Vice President Christine Cumming, the bank's No. 2, has been with the New York Fed since 1979.

-- William Dudley, another senior New York Fed official, is a former Goldman Sachs partner and managing director who is in charge of managing the Fed's interest-rate target.

-- Terrence Checki heads the bank's emerging markets and international affairs group, a critical job at a time when financial markets are reeling worldwide.

-- Fed Governor Kevin Warsh, a liaison to financial markets for the Washington-based board since markets began melting down in the summer of 2007, is a former Bush White House staffer and has worked as an investment banker at Morgan Stanley.

-- JPMorgan Chase & Co chief executive Jamie Dimon's reputation has been burnished, not tarnished, by the crisis.

-- Peter Fisher, an executive with asset manager BlackRock Inc, is a former Treasury under secretary under President George W. Bush and a former New York Fed staffer.

WHAT DOES IT MEAN FOR MARKETS?

* Geithner's selection "takes away some uncertainty and gives investors a sense of continuity," said Fred Dickson, market strategist of D.A. Davidson & Co in Lake Oswego, Oregon. "It may settle the market just a little bit."

* Stock market investors still face formidable headwinds as the year winds down. Banks remain under pressure, most notably Citigroup, and it is unclear what steps the government will take to prevent another collapse like Lehman Brothers'.

* Still, some saw the Geithner news contributing to formation of a bottom for stocks. "You have a broad market index that declined 50 percent, said Rob Stein, managing partner of Astor Asset Management in Chicago, "with an economy that's contracting, sure, but the market is responding as if the entire economy is frozen. And the entire economy is not frozen. Ten percent of the workforce might be unemployed, but not 50."

(Reporting by Emily Kaiser and Mark Felsenthal in Washington and Rodrigo Campos in New York, writing by Glenn Somerville, editing by Gary Hill)