Friday, January 23, 2009

Reid Says Geithner Will Win Senate Approval

President Barack Obama's pick for treasury secretary, Timothy Geithner, won Senate Finance Committee backing on Thursday, and the chamber's majority leader said he expected the full Senate to confirm him.

Obama's top economic Cabinet member needs full confirmation to start work tackling a financial crisis threatening to worsen a yearlong recession as job losses mount.

With an 18-5 vote, the Finance Committee largely overlooked Geithner's underpayment of $34,000 in taxes, clearing the way for a confirmation vote that Senate Majority Leader Harry Reid said he hoped to hold around 6 p.m. on Monday.

"I do," Reid told reporters when asked if he expected Geithner to be confirmed.

Republicans could try to stop him with a procedural roadblock. Reid said that would "be very unwise" politically, adding, "We will have the votes" to clear any such hurdle.

Finance Committee Chairman Max Baucus, a Montana Democrat who has been shepherding Geithner's nomination through controversy, had pushed for floor vote on Thursday, but Republicans objected, asking for more time. "The president needs his team. I'm trying to help him get his team in place," Baucus told reporters.

Geithner told the committee on Wednesday the Obama administration in coming weeks would unveil a multi-pronged effort to stabilize the housing market, strengthen core banks and support consumer credit to help foster economic recovery.

Geithner, who now heads the New York Federal Reserve Bank, was considered by many to be an ideal candidate for the job because he has already been deeply involved in government efforts to prop up financial institutions and markets.

Geithner's nomination appeared without controversy until revelations last week that he underpaid self-employment tax for several years when he worked for the International Monetary Fund earlier this decade.

Although Geithner corrected what he called "careless" and "unintentional" mistakes, the tax errors cost him some votes on the committee.

"I don't believe that the requisite candor exists for me to indicate my support for him with an affirmative vote," Republican Sen. Jon Kyl of Arizona said before voting "no."

Democrats and some Republicans on the panel said Geithner was well qualified and needed on the job as soon as possible.

Sen. Kent Conrad, a North Dakota Democrat, said he would not vote for Geithner in "normal times." "But these are not normal times. And I personally don't think we can afford a further delay in the filling of this critically important position," Conrad said. As he continued, "it is absolutely imperative that we get a secretary in place."

Strong Dollar

Geithner answered dozens more written questions from senators in a 102-page document released on Thursday, reaffirming the Treasury's long-standing currency mantra.

"A strong dollar is in America's national interest," he wrote in the document. "Maintaining confidence in the longterm strength of the United States economy and the stability of the U.S. financial system is good for America as well as our trading and investing partners."

Geithner also issued a stern warning to China, which has a huge trade surplus with the United States, saying Obama believed Beijing was manipulating its yuan currency.

"President Obama -- backed by the conclusions of a broad range of economists -- believes that China is manipulating its currency," Geithner wrote. "President Obama has pledged as president to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices."

But Geithner said that due to the global economic crisis, the immediate focus of U.S.-China relations "needs to be on the broader issue of stabilizing domestic demand in China and the U.S."

"The immediate goal should be for us to convince China to adopt a more aggressive stimulus package as we do our part to try to pass a stimulus package here at home," Mr. Geithner wrote.

A Chinese central bank official said the bank had noted Geithner's recent comments on the yuan and reported them to relevant Chinese government departments.

Geithner also said the Treasury had no current plans to request more bailout money beyond the $700 billion already authorized, but that the situation was "dynamic."

"We have to be prepared to act flexibly and with speed if conditions worsen appreciably, to devote more resources if that is necessary to secure our objectives, and we have to make it clear that we will continue to act until we have restored the strength and vitality of the U.S. financial system," he wrote.

Sources: Reuters, The Wall Street Journal

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