NEW YORK (Reuters) - Timothy Geithner has spent his life avoiding the limelight. Larry Summers has mostly basked in it.
The contrasting personalities will have to meet somewhere in the middle if President-elect Barack Obama’s newly appointed economic team is to make headway in fighting the worst financial crisis in generations.
Differences in style could lead to some sticking points between the two officials, although most believe the relationship will be relatively smooth.
“Although there aren’t major principled policy differences between Geithner and Summers, you can expect that there will be disagreements,” said Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations.
Only time will tell whether this is a clash of personalities in the making.
Geithner is the consummate facilitator. He is a man of detail and known more for his practical nature than for any ideological flourish.
Summers, a Treasury secretary in the Clinton administration, is the polar opposite. He is a big-picture thinker and certainly has a reputation for speaking his mind -- and sometimes putting his foot in his mouth. Most recently, he was forced to resign as president of Harvard University for implying that women had inferior skills in science and math.
“Summers is accountable to the president, so he’s not going to be able to go on television all the time without the president’s approval,” said Steil. “I would be very surprised if Geithner and Summers turn out to be dueling banjos.”
Obama unveiled his economic team on Monday. Geithner is set to take over the Treasury and Summers will act as Obama’s chief economic counsel at the White House.
Financial markets applauded both appointments, relieved that two familiar names would be on board to fight the deepest financial crisis in decades. Stocks on Monday posted their biggest two-day gain since the aftermath of the 1987 crash, helped in part by a Geithner-led rescue of Citigroup.
“He knows where all the bones are buried on Wall Street,” Tom Sowanick, chief investment officer of Clearbrook Financial said last week.
THE OUTSIDER INSIDER
Geithner has been a backroom dealmaker, highly respected by his peers but largely invisible to the public eye. Even as head of the Federal Reserve Bank of New York, amid the worst financial crisis in generations, Geithner has let the U.S. Treasury do the talking despite playing a key role in a string of rescue packages, beginning with Bear Stearns and AIG and now Citigroup.
Stepping into center stage will mean a change of profile for Geithner.
“It’s a difficult transition to suddenly be thrust into the limelight and have to deal with reporters, say the right thing,” said Ted Ake, head of bond trading at Mizuho Securities, citing a number of gaffes early in Ben Bernanke’s tenure as Fed chairman. “But Geithner has the experience to be able to do that right off the bat.”
Just as his experience in managing the crisis comforts investors, that might also provide fodder for Republicans in Congress during his nomination hearings.
They could argue that Geithner did not do enough in his role to prevent the crisis, or second-guess his steps during the unfolding drama, including the decision to allow investment giant Lehman Brothers to fail. Still, his relative detachment at the New York Fed should shield him from ultimate blame for a crisis that few in mainstream economics saw coming.
“The buck didn’t stop with him,” said Brian Fabbri, director of economic research at BNP Paribas. “We know that there’s got to be a lot of re-regulation that takes place, and he’s clearly one of the people you’d want to have in the process. He’s exceptionally qualified.”
Summers was also in the running for Treasury secretary, and analysts say it is telling that he did not get the job. Instead, he was put in charge of the National Economic Council.
A relatively obscure institution that first gained prominence during the Clinton years and produced former Treasury Secretary Robert Rubin, the council answers directly to the president.
A democratic aide told Reuters that Summers might be groomed as a future Federal Reserve chairman to succeed Bernanke. All observers expect him to be very vocal -- perhaps too vocal -- about the direction of economic policy.
Some observers figure Obama wanted to keep Summers close enough to the executive office that he would not wander off on any tangents of his own.
“Summers steps on everybody’s toes,” quipped Fabbri. “That doesn’t mean he and Geithner can’t work together.”
Reporting by Pedro Nicolaci da Costa; Editing by Dan Grebler
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