WASHINGTON – With the country facing a worsening economic crisis, President Barack Obama is hoping to win quick approval of his choice of Timothy Geithner to be Treasury secretary, but first Geithner has to explain how he missed paying $34,000 in payroll taxes earlier in the decade.
The Senate Finance Committee was scheduled to hear from Geithner on Wednesday with his tax mistake expected to be among a number of questions that panel members will pursue. The hearing is being held against the backdrop of a worsening situation in the banking industry.
Shares of major banks plunged on Tuesday as investors feared that an unraveling financial bailout will force the new administration to intervene more deeply into the nation's banking system. Many observers believe the Obama team will have to pump more money into banks or create an entity to take over their toxic assets.
Such moves could dramatically increase government government's involvement in banks, potentially threatening shareholders whose holdings could be wiped out in the event of a takeover.
Even before the shares of banks such as Citigroup Inc. and Bank of America took a renewed tumble, there was widespread unhappiness among lawmakers about how the Bush administration had handled the $700 billion rescue program that Congress passed on Oct. 3 in response to the nation's most severe financial crisis since the Great Depression.
Obama's team has signaled that it plans to greatly revise that program with the aim of getting more help to homeowners threatened with foreclosures and also imposing more strings on the billions of dollars that banks are receiving to make sure the money goes to increased lending.
Lawmakers are also expected to press Geithner for details on what changes the new president will be willing to accept to a massive $825 billion economic stimulus program that Obama hopes to get through Congress in the next few weeks.
Democrats are hoping that the urgency to deal with the country's worsening economic problems will convince lawmakers to confirm Geithner quickly. Finance Committee Chairman Max Baucus, D-Mont., scheduled a committee vote on the nomination for Thursday.
Obama's decision to select Geithner was widely seen as an effort by the new administration to hit the ground running in dealing with the country's economic woes.
