Obama scrambles on Geithner, bailout concerns

By Steve Holland

WASHINGTON (Reuters) - President-elect Barack Obama on Tuesday scrambled to answer questions about the nomination of Treasury Secretary pick Timothy Geithner amid anguished congressional negotiations over a $350 billion financial bailout.

The twin troubles emerged for Obama as he attempts to lay the groundwork for a strong response to the U.S. economic crisis a week before he takes over the presidency.

Geithner faced questions about a housekeeper whose work papers lapsed while she was employed by his family, and about several years when Geithner did not pay Social Security and Medicare taxes for himself.

At his request, Geithner met with members from both parties on the Senate Finance Committee after Iowa Sen. Charles Grassley, ranking Republican on the committee, raised questions about the issues. Grassley made no immediate comment to reporters after the meeting.

The normally drama-free Obama team went into a rare episode of damage control.

Obama's White House spokesman, Robert Gibbs, said in a statement that Geithner -- the president of the New York Federal Reserve Bank whose selection by Obama as Treasury chief in November cheered U.S. financial markets -- had committed honest mistakes that he quickly addressed upon learning of them.

"He made a common mistake on his taxes, and was unaware that his part-time housekeeper's work authorization expired for the last three months of her employment. We hope that the Senate will confirm him with strong bipartisan support so that he can begin the important work of the country," Gibbs said.

'A FEW LITTLE HICCUPS'

Senate Majority Leader Harry Reid, a Nevada Democrat, said he was not concerned at all over the Geithner nomination.

"There's a few little hiccups but that's basically what they are," he told reporters.

New York Democratic Sen. Charles Schumer said he strongly backed Geithner while Max Baucus, a Montana Democrat, said that Geithner corrected the tax errors as soon as they were brought to his attention.

"I believe that these areas while serious, do not rise to the level of disqualification. He's an extremely competent man," Baucus said.

Baucus, chairman of the Senate Finance Committee, sought consent from panel members to hold a hearing on Geithner's nomination on Friday, the panel said.

His nomination needs approval by the full Senate.

Problems related to household employees have sunk previous nominees. In 1993, President Bill Clinton had to withdraw two nominees for attorney general, Zoe Baird and Kimba Wood, for hiring undocumented immigrants as nannies.