Today, President Barack Obama’s nominee for Treasury Secretary — president of the Federal Reserve Bank of New York Timothy Geithner — went before the Senate Finance committee for his confirmation hearing. Geithner “faces a grilling in Congress” after reports surfaced that he failed to pay self-employment taxes on his 2001–2004 returns while working at the International Monetary Fund.
At the hearing, Geithner wasted no time in addressing the controversy about his missed taxes. He said his mistakes were careless and avoidable but “completely unintentional.” He apologized to the committee, saying, “I should have been more careful.”
The right wing has been pushing Senate conservatives to block Geithner’s confirmation due to the tax mix-up:
Michelle Malkin: Will any GOP Senator stand up to failout bailout serial tax evader Tim Geithner, or will they all do the lemming dance now and whine about how nobody could see his shortcomings later?
Newt Gingrich: Senate Republicans should make it clear that they will not permit a tax evader to become the secretary of the Treasury.
But when it came to predicting the economic crisis, Geithner has been much more prescient than the man he has been tapped to succeed, Henry Paulson.
In June 2006, the Senate confirmed Paulson with a simple voice vote. Paulson was called “a very strong choice” and “the right man at the right time” by lawmakers.
Paulson’s tenure was a disaster, and throughout the current economic crisis, he consistently maintained that the financial system was “safe and sound.” Geithner, meanwhile, was warning that financial innovation and a weak housing market were threatening to topple the economy. The Wonk Room has assembled a timeline comparing Geithner’s cautionary statements with Paulson’s public insistence that everything was fine. Here is an example:
Geithner: Financial innovation is creating systemic risk.
There are aspects of the latest changes in financial innovation that could increase systemic risk…The complexity of many new instruments and the relative immaturity of the various approaches used to measure the risks in those exposures magnify the uncertainty involved. [Speech at the Global Association of Risk Professionals 7th Annual Risk Management Convention & Exhibition in New York City, 2/28/06]
Paulson: The world economy is stronger than I have ever seen it.
We are fortunate to face our long-term challenges from a position of strength. As a participant in financial markets for more than thirty years, I say with confidence that over the last couple of years, the world economy has been stronger than I have ever seen it. [Speech at CBI National Conference, 11/28/06]
Read the entire report here.
Cross-posted at The Wonk Room.