How long before Summers replaces Geithner?
Feb 11th 2009 10:30AM
Updated Dec 4th 2009 10:58AM
Tim Geithner's performance on the media stage left much to be desired. In theory, he should be judged on the quality of his ideas -- which I found mediocre -- but he truly bombed as a communicator. And this raises questions about whether President Obama should allow him to speak in public. Since he is such a gifted salesman, I think it would be better for Obama to get into the substance of the bank rescue and to be its front-man. I know it's a radical and shocking suggestion, but he may also want to consider replacing Geithner.
Geithner dodged key questions yesterday: Which toxic-debt-addled banks will the U.S. allow to fail? How will illiquid assets be removed from bank balance sheets? And what will be done to stop the fall of house prices that triggered the turmoil? Here's why I thought Geithner plan hovered between bad and mediocre. And I think creating new banks to get lending going and letting the FDIC buy bad mortgages are the ways to address these issues which Geithner avoided.
But there is a bigger issue with Geithner's performance. One of the roles of the Treasury Secretary is to project confidence and a sense of being in command. Geithner came across in the interview I saw with NBC's Brian Williams as fairly terrified -- and there is something about the way he seems to be peering up from a crouched position with a deer-in-the-headlight look in his face -- that makes it appear that he is trying to keep a bomb from exploding underneath him.
It's bad enough that Geithner wants to spend $2 trillion more on fixing finance after banks have taken $756 billion in credit losses. If it was clear how that money would fix the problem, I might grudgingly accept the spending. But it's just not clear how his ideas will work.
Moreover, given the enormous problems the financial system faces, we may not have time to find out. So it may be necessary to find a Treasury Secretary who does not project a weak leadership persona and timid intellectual nature -- in short, it may be time for Larry Summers to return to Treasury.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.