Next time he testifies before Congress, Treasury Secretary Timothy Geithner might want to case the room first.
On Tuesday, protestors snagged the seats behind him prior to a hearing on US bank bailout policies. On C-SPAN, viewers saw Secretary Geithner defending administration actions – while a pink placard saying “GIVE US OUR $$$$$ BACK” waved right behind his head.
One hundred days into the Obama administration, the president himself remains hugely popular. According to polls, the US public trusts him to do the right things to fight the recession now gripping the nation.
But the president’s boyish, wonky Treasury chief? Not so much. Geithner’s public ratings are not as high as those of his boss. Nor are poll respondents so sure they like what he’s doing.
It’s a disparity that could hint at trouble to come. Geithner’s polls may reflect widespread anger about the financial industry rescue he oversees, more than unease with him personally. And that anger could limit White House options for further action as it continues to try to stabilize the nation’s credit system.
“People are angry because they are paying for programs that haven’t been fully explained.… They want to see that taxpayer money is used to advance the public interest, and not just the interest of Wall Street,” said Elizabeth Warren, a Harvard law professor and chairman of the Congressional Oversight Panel, at Geithner’s April 21 appearance before the panel.
A crucial time for Geithner
Right now, Geithner is entering a period that could represent a turning point in his bank bailout efforts.
This weekend, he huddles with global finance chiefs and central bankers at International Monetary Fund and World Bank meetings in Washington. Meanwhile, US bank regulators are set to release details of the assumptions behind their so-called “stress tests” of banks, which are intended to see whether big financial institutions have enough capital to survive in the long term.
Actual results of the tests for the biggest banks are not supposed to be released until May 4. It is unclear what the administration will do if a number of big institutions are deemed shaky.
“In dealing with the banks that emerge the weakest from the stress test, regulators are constrained both by limited authority and limited funds,” notes a Goldman Sachs April 23 analysis.
The Treasury has already committed most of the $700 billion Troubled Asset Recovery Program (TARP), according to Goldman Sachs. President Obama put a marker in his proposed budget for hundreds of billions more in bailout money, but given the current wave of populist ire about executive bonuses and other perceived Wall Street excesses, it’s uncertain if Congress will approve more bailout money.
Americans largely remain positive about Mr. Obama’s economic direction. A recent Gallup poll found that 71 percent of respondents had a great deal or fair amount of confidence in Obama to do the right thing for the economy.
Asked the same question about Geithner, only 47 percent of respondents said they had a great deal or fair amount of confidence in his economic actions. A March Gallup survey found Americans divided on Geithner’s performance, with 42 percent approving of the way he has handled his job, and 40 percent disapproving.
Reckoning with populist outrage
Because the Treasury’s TARP program is the funnel through which taxpayer cash has been poured into the nation’s financial system, it is Geithner who, rightly or wrongly, hears most about the public’s rage with bailouts when he appears on Capitol Hill.
The Congressional Oversight Panel is a five-member group appointed by the House and Senate to oversee TARP spending, and Geithner’s appearance Thursday was the first time panel members have been able to question him in person.
The meeting, though polite, was contentious, as group members peppered him with questions reflecting their dissatisfaction. Why hadn’t the administration fired a bank chief, as it did the head of GM? Why wouldn’t it accept TARP repayments from Goldman Sachs and other institutions? What was his exit strategy to disentangle the government from its investments in failed insurer AIG?
“The evidence is mixed” so far as to whether the government’s actions have restored adequate credit flow to the US economy, Geithner admitted.
TARP inspector general Neil Barofsky appeared at a hearing of the Joint Economic Committee Thursday, when lawmakers again lambasted administration officials for actions many of their constituents consider mystifying.
The White House has already deployed its most powerful weapon, the president himself, in an effort to combat this unease. In his April 14 speech on the economy delivered at Georgetown University, Obama took 45 minutes to lay out his overall economic strategy, in an attempt to explain why officials are pumping money into financial institutions that helped cause the recession in the first place.
Obama’s ability to continue taking unpopular steps remains to be seen. In Washington, it may be easy for think-tank economists to discuss the need for further federal intervention. But at a recent Brookings Institution seminar, senior fellow Robert Litan warned against ignoring the swell of outrage around the country.
“People are furious at Washington,” he said. “Not just the bankers. They’re angry about the bailouts. They’re angry about everybody getting all the money except them.”
That outrage will be a force to be reckoned with, said Mr. Litan, and not just with regard to the current crisis, but with any future effort to deal with the exploding costs of Medicare and Social Security.
The decline in the value of assets such as homes and retirement accounts has put people in a parsimonious mood, he said. “People don’t want to pay more taxes because they just lost $15 trillion.”