Geithner, apparent pick for Treasury, isn’t a Wall Street man
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The stock market finished a dismal week with a powerful rebound, on reports that President-elect Barack Obama will name New York Federal Reserve President Timothy F. Geithner to head the Treasury Department.
The Dow Jones industrial average rose 494.13 points, or 6.5%, to 8,046.42, paring its loss for the week to 5.3%.
The Standard & Poor’s 500, which hit an 11-year low Thursday, gained 6.3% to 800.03.
The fact is, any little bit of good news might have spurred a rally today, because the mood has been so grim. Even after today’s gains, the Dow Jones Wilshire 5,000 stock index this week lost nearly $1 trillion in market value.
If nothing else, Wall Street may be gratified that Obama is moving quickly to put his economic team together, given the overwhelming challenges the new president faces on that front.
‘Obama should get an ‘A’ for a quick rollout of his economic team,’ said Tony Crescenzi, bond market strategist at Miller, Tabak & Co. in New York. ‘What is needed now is for the team to be clear, concise, and show conviction about what they plan to do so as to bridge a gap between now and January when they take power.’
Geithner, 47, has headed the New York Fed since November 2003. As Crescenzi noted, ‘Geithner is neither a ‘market’ man nor an academic -- he does not have a Ph.D. and he has not worked on Wall Street.’
He spent 1994 to 2001 at Treasury, in various assistant-secretary and under-secretary posts. He was at the International Monetary Fund from 2001 to 2003, before being picked for the New York Fed job.
Wall Street loves to have one of its own at Treasury, but as Crescenzi notes, the New York Fed job entails extensive contact with the Street, so Geithner is no stranger there.
And in any case, given the track record of current Treasury Secretary Henry M. Paulson -- who came from Goldman Sachs -- Congress and the public might have had a bad reaction to another career Wall Streeter in that job.
Still, because Geithner has been heavily involved in structuring the various pieces of the government’s financial-system bailout this year, he has to share some of the credit, or blame, with Paulson, depending on your perspective.
Geithner’s challenge at Treasury will be nothing short of monumental: end the credit crisis, keep the economy from careening into something much worse than a typical recession, and restore confidence in the stock market, which despite Friday’s rebound still is down 48.9% from its 2007 peak, as measured by the S&P 500.
Harvard University economist Jeffrey Frankel opines on his blog today: ‘Tim Geithner is refreshingly straightforward and personable, and doesn’t ‘stand on ceremony.’ This is a guy who does not lose his cool. Just what the country needs.’