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Paul Light on the unofficial Cabinet

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NYU professor Paul Light has a good op-ed in today’s New York Times on the interminable Senate confirmation process and how that leads to the growth of unconfirmed “czar” positions:

The Senate has done virtually nothing, for example, to address the glacial pace of confirmations that often leads presidents to expand the White House staff as well as the number of appointees who serve without Senate approval. Although he has submitted the names of nominees to the Senate relatively quickly, President Obama will be lucky if the last of his nearly 500 full-time cabinet and subcabinet officers are confirmed by March 2010.

Obviously the president has made some mistakes with his Cabinet picks. The endless parade of nominees with tax problems — Tim Geithner, Tom Daschle, Nancy Killefer, Hilda Solis — has not exactly inspired confidence in the vetting process or the integrity of the people being tapped for public service.

But, tax troubles and all, Obama still has 55 nominees pending before the Senate; legislators have confirmed just 43 people in the more than two months of Obama’s presidency.

Congress has a lot on its plate. But you would think confirming Obama’s appointees would be a higher priority.

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Empty Treasury

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Tim Geithner is not having much luck finding a deputy.

According to ABC News, his third pick for deputy treasury secretary — H. Rodgin Cohen, a partner in a New York law firm — has withdrawn his name from consideration. No word on why, just that a “problem” came up late in the vetting process.

Geithner (who is arguably the most important Cabinet secretary right now) is supposed to have 17 confirmed deputies.

He currently has zero.

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Geithner announces TARP 2.0 plan

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Treasury secretary Timothy Geithner just unveiled the Obama administration’s plan to revise the Troubled Asset Relief Program, the financial system bailout. We’re calling it “TARP 2.0.”

A few of the highlights that impact federal agencies:

  • The Treasury Department will “stress-test” banks. Presumably this is to ensure that banks receiving money through TARP 2.0 are actually solvent. There’s serious concern that many of the largest banks in America are insolvent.
  • Treasury and the Federal Reserve will create a “bad bank” to buy toxic securities with a mix of public and private capital.
  • The government will guarantee a larger percentage of Small Business Administration loans. SBA lending has plummeted in recent months because of tight credit markets and the deepening recession.

Geithner said the Obama team would unveil its plan for stabilizing the housing markets “within the next few weeks.” Presumably that will involve Treasury, the Federal Housing Finance Agency, the Housing and Urban Development Department, and others.

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Towns calls for more TARP accountability

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Rep. Edolphus Towns, House Oversight and Government Reform Committee chairman, is calling on the Treasury Department to implement accountability and transparency recommendations.

In a letter to Treasury Secretary Timothy Geithner Thursday, Towns, D-N.Y., asked him to listen to the recommendations of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program.

Barofsky testified before the committee Wednesday, recommending that all TARP agreements include requirements that receipients of federal dollars must provide Barofsky and other oversight authorities information on how the money has been spent. He also urged creation of internal controls and clarifying compliance with TARP rules.

He asked Geithner to implement Barofsky’s recommendations before distributing any more TARP funding.

Towns writes that better TARP oversight could be a model for future program oversight operations:

“Moving forward, I would like to see the same level of oversight performed by independent, presidentially–appointed inspectors general at other financial regulatory agencies which are spending taxpayer money in an effort to boost the economy.”

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Timothy Geithner confirmed

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The Senate just voted to confirm Timothy Geithner as Treasury secretary. Senators on both sides of the aisle praised his financial expertise, but some Republicans withheld their support over a problem with some back taxes.

The final vote was surprisingly close, 60-34; several Democrats were among the “nay” votes, including Sens. Robert Byrd, D-W.Va., and Tom Harkin, D-Iowa.

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Senate panel approves Geithner as Treasury secretary

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The Senate Finance Committee approved the nomination of Timothy Geithner to be Treasury secretary a few minutes ago by an 18-5 vote, according to our congressional reporter Rebecca Neal. The committee’s approval was expected despite concerns by many senators that Geithner failed to pay more than $30,000 in self-employment taxes earlier this decade when he worked at the International Monetary Fund. Geithner apologized for the error, repaid his owed amount, and said it was an unintentional mistake. Some senators including Sen. Charles Grassley, R-Iowa, said it sends a bad signal to appoint a Treasury secretary — which oversees the IRS — who failed to pay taxes.

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Timothy Geithner uses TurboTax…

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… but he doesn’t blame the tax preparation software for his tax problems. Just one of many exciting facts from the Treasury secretary-designate’s confirmation hearing this morning.

Geithner, by the way, is likely to be confirmed despite the tax issue. Senate Finance committee chairman Sen. Max Baucus, D-Montana, plans to hold a vote tomorrow, despite objections from several Republican committee members. The nomination would then go before the full Senate.

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Paying his dues at Treasury

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We’ve been wondering why the Senate Finance committee took so long to schedule a confirmation hearing for Treasury secretary-designate Timothy Geithner.

It may have to do with a tax problem:

Timothy F. Geithner, President-elect Barack Obama’s choice for Treasury secretary, failed to pay more than $34,000 in federal taxes over several years early this decade, and also faces questions about the employment papers of a former household employee, suddenly complicating what had seemed to be an easy confirmation process in the Senate.

Hard to know what to make of this. Geithner repaid the back taxes, with interest, after the Obama team discovered the problem. And the immigration bit seems like a non-story: The housekeeper was authorized to work in the United States, but her authorization expired during the last three months of her employment with Geithner.

On the other hand: A Treasury secretary who didn’t pay a big chunk of his tax bill? Almost as bad as a Ways & Means committee chairman who doesn’t understand the tax code.

What do you think? Is the tax issue a distraction from much bigger economic problems? Or should it affect Geithner’s nomination?

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Tracking the transition: Geithner to head Treasury

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NBC News today reported that Timothy Geithner, president of the Federal Reserve Bank of New York, will likely be Barack Obama’s Treasury Secretary. Along with current Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, Geithner has been a central figure in formulating the government’s response to the recent economic turmoil.

The choice of Geithner may have boosted confidence on Wall Street. In the last hour of trading, stocks shot up and the Dow Jones Industrial Average was up nearly 500 points at its close.

The Washington Post has this to say about Geithner:

Geithner, who is 47, is most closely aligned with Clinton-era economics, having previously worked at Treasury under Clinton secretaries Bob Rubin and Larry Summers.

But he is thought of as an economic centrist. [...] Prior to Treasury, Geithner worked at the IMF and with Henry Kissinger at his consulting firm.

Read the rest of this entry »

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