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Reid says Geithner will win Senate approval

WASHINGTON (Reuters) - President Barack Obama’s pick for treasury secretary, Timothy Geithner, won Senate Finance Committee backing on Thursday, and the chamber’s majority leader said he expected the full Senate to confirm him.

New York Federal Reserve Bank President Timothy Geithner, US President Barack Obama's nominee for Treasury Secretary, adjusts his microphone during his confirmation hearing before the Senate Finance Committee on Capitol Hill in Washington, January 21, 2009. REUTERS/Brian Snyder

Obama’s top economic Cabinet member needs full confirmation to start work tackling a financial crisis threatening to worsen a yearlong recession as job losses mount.

With an 18-5 vote, the Finance Committee largely overlooked Geithner’s underpayment of $34,000 (24,649 pounds) in taxes, clearing the way for a confirmation vote that Senate Majority Leader Harry Reid said he hoped to hold around 6 p.m. (11 p.m. British time) on Monday.

“I do,” Reid told reporters when asked if he expected Geithner to be confirmed.

Republicans could try to stop him with a procedural roadblock. Reid said that would “be very unwise” politically, adding, “We will have the votes” to clear any such hurdle.

Finance Committee Chairman Max Baucus, a Montana Democrat who has been shepherding Geithner’s nomination through controversy, had pushed for floor vote on Thursday, but Republicans objected, asking for more time.

“The president needs his team. I’m trying to help him get his team in place,” Baucus told reporters.

Geithner told the committee on Wednesday the Obama administration in coming weeks would unveil a multi-pronged effort to stabilise the housing market, strengthen core banks and support consumer credit to help foster economic recovery.

Worries over potential delays in Obama’s economic stimulus efforts have helped pushed stocks lower in recent days as mounting corporate job cuts and weak housing data feed worries about a worsening economy.

Comments from White House spokesman Robert Gibbs that the new president was working to ensure that stimulus and financial stability plans were “implemented quickly” helped limit some damage, but major stock indexes still lost more than 1 percent on Thursday.

Gibbs added that Obama was pleased with the committee’s “strong, bipartisan” vote.

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Geithner, who now heads the New York Federal Reserve Bank, was considered by many to be an ideal candidate for the job because he has already been deeply involved in government efforts to prop up financial institutions and markets amid the worst financial crisis since the 1930s.

TAX PROBLEMS COST VOTES

Geithner’s nomination appeared without controversy until revelations last week that he underpaid self-employment tax for several years when he worked for the International Monetary Fund earlier this decade.

Although Geithner corrected what he called “careless” and “unintentional” mistakes, the tax errors cost him some votes on the committee.

“I don’t believe that the requisite candour exists for me to indicate my support for him with an affirmative vote,” Republican Sen. Jon Kyl of Arizona said before voting “no.”

Democrats and some Republicans on the panel said Geithner was well qualified and needed on the job as soon as possible.

Sen. Kent Conrad, a North Dakota Democrat, said he would not vote for Geithner in “normal times.”

“But these are not normal times. And I personally don’t think we can afford a further delay in the filling of this critically important position,” Conrad said. “I think we are not anywhere near out of the woods, that very serious days lie ahead of us, and that it is absolutely imperative that we get a secretary in place.”

STRONG DOLLAR MANTRA AFFIRMED

Geithner answered dozens more written questions from senators in a 102-page document released on Thursday, reaffirming the Treasury’s long-standing currency mantra.

“A strong dollar is in America’s national interest,” he wrote in the document.

Geithner also issued a stern warning to China, which has a huge trade surplus with the United States, saying Obama believed Beijing was manipulating its yuan currency.

“President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency,” Geithner wrote. “President Obama has pledged as president to use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices.”

But Geithner said that due to the global economic crisis, the immediate focus of U.S.-China relations “needs to be on the broader issue of stabilizing domestic demand in China and the U.S.”

A Chinese central bank official said the bank had noted Geithner’s recent comments on the yuan and reported them to relevant Chinese government departments.

Geithner also said the Treasury had no current plans to request more bailout money beyond the $700 billion already authorized, but that the situation was “dynamic.”

“We have to be prepared to act flexibly and with speed if conditions worsen appreciably, to devote more resources if that is necessary to secure our objectives, and we have to make it clear that we will continue to act until we have restored the strength and vitality of the U.S. financial system,” he wrote.

Additional reporting by Jeremy Pelofsky, Rick Cowan, Tim Ahmann, Mark Felsenthal, Doug Palmer, Emily Kaiser and Thomas Ferraro in Washington, and Lu Jianxin in Shanghai; Editing by Jan Paschal and Peter Cooney

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