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Jackie Calmes is a bit over the top:
Fair or not, questions about why Mr. Geithner did not know sooner about the A.I.G. bonuses and act to stop them threaten to overwhelm his achievements and undermine Mr. Obama’s overall economic agenda.Not, I think. As irritating as the AIG bonus sideshow has been, it is clear that that money will be recouped, perhaps doubly, as the Treasury will subtract that $165 million from the next scheduled AIG loan, congress will tax the bonuses away from the recipients, and apparently some have already given money back. Say what you will about the political mistakes of not noticing these contracts amidst dealing with the entire financial crisis, this is responsive government: concerns have been heard and action has been taken. Noam Scheiber's post is the most sensible commentary on the troubles surrounding the Treasury Secretary.On the other hand, I disagree with Dana's post, particularly this observation: "It's beginning to look as if the administration's links to Wall Street -- in the person of Tim Geithner -- blinded it to this quite foreseeable PR disaster." First, Geithner really isn't a "Wall Street figure" -- he never worked at a Wall Street firm. He was a central banker and a Treasury official. If he were a Wall Street figure, he would have known how those bonuses work. As well, observers familiar with the Fed and Treasury role have noted that this situation was not entirely foreseeable, since the people who knew about aren't political appointees but technocrats, and that's probably the way it should be. Given the amount of anger over how the new administration's bank plan hasn't addressed the root issues of why we are funding concerns like AIG and what the next steps should be -- you know, the problem Geithner is working on -- it's not unsurprising that he wasn't personally monitoring a small percentage of the bailout funds that went out under the last administration. Though there are worries about stoking anger, I think Obama is responsibly reacting to folks' outrage -- which can't be ignored -- even as his advisers try to reframe the issue. Meanwhile, the markets are starting to regain their confidence -- not that's an indicator of overall success, but it is something -- bank stress tests are proceeding, and the stimulus and housing plans are barely underway. There are two approaches to criticizing Geithner. One is the "you're not doing X strategy that I prefer," which is reasonable enough, but as a personnel question you have to realize that X strategy isn't entirely determined by Geithner. Larry Summers, Christina Romer, and, uh, Barack Obama, among others, are also included. Geithner may be a figurehead for these discussions -- and the administration would clearly like him to be should things get more heated -- but don't forget where the buck stops. The second approach is the score political points by changing your position on government economic intervention. This is mostly the province of Republicans who could care less what policies the administration is promoting. It's not clear to me yet that Geithner has made bad decisions, it's just that he either hasn't made necessary decisions yet, or that the execution of some of his plans hasn't been perfect. Calling for his head now would be counter-productive at minimum and disastrous at worst. Just imagine the confirmation hearings. Imagine the inevitable hold put on a hypothetical replacement by Republican senators until promises are extracted from the administration. Imaging the three week focus on senate battles while the economy goes to hell in a hand cart. No, I hope we're not finished with Geithner yet. He has got to do better, especially on the politics, but it's hard to be hard-charging when you work for No-drama Obama.
-- Tim Fernholz
