Why Should I Care: Timothy Geithner, Your Next Treasury Secretary

This post first appeared on Minyanville.

Tears of joy streamed down your cheek as you saw your eldest son off to his first day of school this morning. And ever since he left, Spider-Man backpack slung over his left shoulder and transformer in hand, you’ve been eagerly expecting his return.


You wonder: Did he behave? Was he polite? Did he manage to learn anything?


Finally, the door flies open. A shock of blond hair rushes toward you, arms extended for a bear hug.

“Mommy, mommy, I love school! The kids are so nice, the teacher is funny and we played games all day.”

“That’s wonderful. Did they teach you anything?”

“Yes! We talked about what we want to be when we grow up. Mommy, when I grow up, I want to be the Treasury Secretary of the United States.”

Wait a second.

A doctor, an astronaut, a baseball player - those make sense. But Treasury Secretary? Is this kid for real?

Turns out little Billy’s sharper than you think.

Only 2 months ago, newspapers were calling Henry Paulson, the current Treasury Secretary, the most powerful man in the world.

And for good reason.

The US economy -- the largest in the world -- is in the throws of financial calamity, and he’s the man charged with doing something about it.

After Inauguration Day on January 20th, the torch will be passed - most likely to Timothy Geithner, the head of the New York Federal Reserve Bank. His nomination by President-Elect Barack Obama was cheered by Wall Street to the tune of a 6% late-day rally.

Secretary Paulson’s notoriety is a sign of the times, but by and large Treasury Secretaries are low-profile, old white guys that really, really, like finance. If you rattled off the names Donald Reagan, Lloyd Bentsen, Paul O’Neill -- all former holders of the job -- most people would return a blank stare.

The Treasury itself describes the job of Secretary as “the principal economic advisor to the President” with a “critical role in policy-making.” In other words, he tells the Commander-in-Chief how much stuff costs.

Furthermore, the Secretary is responsible for managing the public debt. And a $10.6 trillion burden isn’t something to be taken lightly.

The incoming Timothy Geithner will assume the additional responsibility of doling out what’s left of the $700 billion bailout package.

With half the money already spent, and thousands of banks -- some struggling mightily to survive -- squabbling over their share, his role in shaping the future of America’s economic landscape will be especially critical.

So, who is this Geithner fellow anyway?

Very possibly, the kid who ran home from school and told his mother he wanted to control America's purse strings. His credentials are, indeed, impeccable.

Born in Brooklyn, Geithner received a first-rate education. After attending the International School in Bangkok for post-secondary studies, he graduated from Dartmouth with a Bachelor of Arts in government (foreshadowing!) and Asian studies. Next came a Masters degree in international economics from Johns Hopkins. Dumb guy.

Out of graduate school, Geithner worked for 3 years with Kissinger Associates in Washington before joining the Treasury in 1988. No stranger to international relations, he’s lived in East Africa, India, Thailand, China and Japan - and for a time was the assistant attaché at the American Embassy in Tokyo.

Prior to being appointed director of the Policy Development and Review Department of the International Monetary Fund, Geithner served as Under Secretary of the Treasury for International Affairs from 1998 to 2001.

He was named President and Chief Executive Officer of the New York Fed in 2003.

Throughout the last 12 months, Geithner has been repeatedly shoved into the national spotlight, as financial institutions in his native New York have sputtered.

Earlier this year, he kept watch as Ambac (ABK) and MBIA (MBI), the country’s biggest bond insurers, nearly collapsed. He played an integral role in the sale of Bear Stearns to JPMorgan (JPM) and got his hands dirty in the bailout of AIG (AIG). Some even point to him as an advocate for letting Lehman Brothers fail.

When he takes the reins from Secretary Paulson in January, he’ll be charged with preventing what many believe could become this generation’s Great Depression. The next economic stimulus package and any rescue of beleaguered automakers General Motors (GM), Ford (F) and Chrysler will bear Geithner’s mark. Additionally, the entire regulatory framework of the US financial system is expected to be overhauled in the not-too-distant future. The secretary is likely to preside over that initiative.

Geithner has his work cut out for him, but it wouldn’t be too much of a leap to say he’s been preparing to do this job his whole life - maybe even since his first day of school.