Obama considers Summers, Geithner for Treasury

WASHINGTON (Reuters) - President-elect Barack Obama’s short-list for Treasury secretary includes one man with a reputation for being too blunt and another whose genial manner makes some wonder if he is tough enough.

Neither Lawrence Summers’ nor Timothy Geithner’s expertise is in doubt, but there are questions about who is better suited for the sensitive post with global markets mired in the worst turmoil since the Great Depression.

Summers is tough but possibly too outspoken. Geithner is even-tempered but possibly too nice.

The two are the most often publicly mentioned among several candidates Obama is believed to be considering.

Obama has said he wants to move quickly but deliberately to pick U.S. Treasury Secretary Henry Paulson’s successor to take over early next year.

Summers, 53, and Geithner, 47, are veterans of the Clinton administration who worked together on a series of crises from the Mexican peso devaluation in the mid-1990s to the Asian financial contagion a few years later.

Since Obama’s November 4 election victory, markets have waited anxiously for his choice to head a department that has been granted wide powers to try to pull the nation back from the financial brink.

In an interview in September, Obama told Reuters he wanted “somebody with extraordinary credentials who knows the marketplace, knows the players and knows government.” He also said the candidate must share his support for a tax code that gives more benefits to the middle class.

Summers and Geithner both command respect on Wall Street and support the broad outlines of Obama’s economic philosophy.

Summers, who was Treasury secretary for the final 1-1/2 years of the Clinton administration, has been a senior adviser to Obama for several months and helped guide his response to the financial meltdown.

The intense and blunt-spoken Summers became a full professor at Harvard at 28 and was later president of the university where his abrasive style made many enemies.

His suggestion in 2005 that men had more innate ability in science and engineering than women, together with a series of other missteps, eroded his support among faculty. Summers resigned as Harvard president a year later.

Some women’s groups already have expressed reservations about putting Summers back in charge of Treasury.


Geithner, who holds the key position of president of the New York Federal Reserve Bank, is much milder-mannered. But some financial market participants wonder if he has the necessary steeliness for the job at this crucial time.

These sources, who did not want to be quoted for fear of alienating the next Treasury secretary, said Summers would be the better choice because of his more forceful style plus his past experience running Treasury.

Roger Kubarych, chief U.S. economist at UniCredit MIB, said both men would bring strengths. Summers has demonstrated his “mastery of the policy options” in newspaper articles and has often been ahead of the curve in recommending solutions while Geithner has handled his New York Fed role expertly.

Of course, Obama may ultimately opt for a third candidate. Often mentioned is former Fed Chairman Paul Volcker, 81, who because of his age would probably serve only for a short time.

Kubarych said the list of contenders may extend well beyond the few whose names have circulated. He noted that with the Bush tax cuts due to expire in 2010, the next Treasury secretary will need to negotiate broad changes to the tax code with Congress.

That might argue for former Senate Majority Leader Tom Daschle or someone else with congressional experience.

University of Maryland economics professor Peter Morici sees shortcomings in both Summers and Geithner, describing Summers as too acerbic and criticizing Geithner’s role in helping engineer an Asian financial rescue.

Morici would prefer a banker, with hands-on experience of lending, rather than someone who carries the taint of past association with New York.

Editing by Alan Elsner