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How Many Days Does Tim Geithner Have Left?

Posted by Larry Doyle on November 25, 2009 8:51 AM |

Is Treasury Secretary Geithner on the hot seat? With populist anger rising in the land, will Geithner be Obama’s sacrificial lamb to appease the masses? Why is Geithner in the line of fire?

1. the economy.

2. perception that he is the chair of the “Wall Street-Washington Incest Club.”

3. the disregard for our currency.

4. does not command full respect in the international community.

Geithner is getting hit with volleys from both sides of the aisle. Is the tepid support provided by the White House an indication that Tim is being readied to be fed to the wolves or simply an unwillingness to acknowledge the topic?

The fact is, the economy is not going to improve anytime soon. Obama’s approval ratings have declined along with the economy. Obama has already indicated his support for Ben Bernanke’s return as Fed chair. While the administration would prefer the topic of Geithner’s fate to go away, it is picking up momentum. Bloomberg discussed Geithner’s potential dismissal this morning.

Who would be Geithner’s likely replacement? JP Morgan’s CEO Jamie Dimon. The Financial Times highlights this potential in writing, Secretary Dimon:

Media speculation that Jamie Dimon, JPMorgan Chase chief executive, is in the running to succeed Timothy Geithner, embattled US Treasury secretary, may not be as far-fetched as sceptics suggest. Having already committed himself to reappointing Ben Bernanke as Federal Reserve chief, Mr Geithner might be a convenient candidate for Barack Obama to throw under the bus as unemployment surges. Though Mr Geithner is only two weeks younger than the president and five younger than Mr Dimon, he lacks their gravitas.

Geithner has been in the cross-hairs before. I evidenced as much in writing last March 20th, “Will Jamie Dimon Be the Next Treasury Secretary?”:

The pressure on Treasury Secretary Tim Geithner is increasing from within the Democratic Party, across the aisle, and the media. Will Tim be fed to the lions? Well, the standard procedures of implementing change seem to be occurring. What are those steps?

JP Morgan Chairman and CEO, Jamie Dimon

JP Morgan Chairman and CEO, Jamie Dimon

1. A vote of confidence by the Administration. Always a kiss of death!2. Leak the name of a strong prospective secretary.

Who might that be? JP Morgan Chairman and CEO, Jamie Dimon.Dimon is enormously well respected in Washington and Wall Street. He can quickly build a team. He has run very large organizations. He has been a longtime Democratic supporter and publicly promoted President Obama and his plans.

I find it interesting that Dimon’s name was bandied about last October as a prospective leader of Treasury.  Market Watch highlighted this fact in reporting The Next Treasury Secretary Is…

As the firestorm over the prospective legislation to restrict Wall Street bonuses grows, do not be surprised to see Dimon ride in on the white horse to broker peace between Washington, the financial community, and the public at large.

While I do not expect anything to happen with Geithner between now and year end, I would not be surprised to see Geithner exit and Dimon enter early in 2010. Were the recent management changes at JP Morgan made in anticipation of this move by Dimon? Perhaps.

Would the administration make this change if it thought it might bump Obama’s approval ratings three to five points? Without a doubt.

What is the over-under on Tim’s days in Washington?

What do you think?

LD

  • Petricone456

    JP Morgan stock has underperformed the broader bank index (BKX) by about 5 percentage points month-to-date… While there could and probably are other factors at play there, I would not be shocked to hear some portfolio managers lightened up on JPM fearing Dimon would no longer be at the helm.

  • Bill

    I don’t know if Obama has any plans to change Treasury Secretaries, but if he did it wouldn’t be to get a bump in his approval ratings. At ~40%, Obama is still running way higher than W. Bush ran through most of his presidency. The idea that somehow this mess would be or should be sorted out by now and that we need someone to hold accountable when it isn’t is foolhardy to say the least. Geithner and anyone else is going to need more time to really bring the economy back into balance and if Obama is worth the praise that has been bestowed upon him he will surely be reassuring Mr. Geithner that he will have that time so that he can focus on doing the recovery correctly. I think Obama is that forward thinking and Mr. Geithner will have until at least the end of year 2 to make the recovery sustaining.

  • Mike

    Who’s gonna run JP Morgan if Dimon leaves?

    • Larry Doyle

      Would likely be Jes Staley who was recently shifted from the head of Asset Mgmt to running the Investment Bank.

  • TeakWoodKite

    LD are you starting a pool? LOL Timmy isn’t going anywhere soon. That would mean BO is failing, which BO won’t admit to.
    It’s a good question as to who would be a good replacement. mmmm….somebody with a small business backround and having nothing to do with the street or campaign finance issues?

  • coe

    I really don’t think the President is supposed to be throwing his inner circle appointees under the bus so soon…that would smack of desperation…whether or not Geithner should have been appointed in the first place is a different question – perhaps he really should have paid his taxes! On one level I see Barack Obama, Tim Geithner and several other key members of the Administration playing Government 201 in a graduate school seminar – they have put together a confident working team of intellectually elite eager overachievers and are readying a sweeping term paper…trouble is, this is the real world, not college…I agree with many of the other comments…

    As for Jamie Dimon, I happen to believe he is an exceptional banker, with a great mastery of detail, and the unusual combination of strength of vision and the ability to lead…doesn’t exactly hurt that he is a Democrat…the Treasury role requires expertise in both capital markets as well as global markets in my opinion…so much is at stake…I would think at this stage such an appointment would be a timely turn of public service for Mr. Dimon as well as a launching pad for any possible political aspirations he might harbor…to his credit, JPMorgan is in very decent shape on absolute as well as relative terms, so his stewardship has been quite effective in these challenging times…I’m sure he would be thrilled, however, to fence with the pea brain gasbags in Congress! Right guy, yes – eminently qualified…but a very bad move at the wrong time for our President…one man’s opinion

  • fiscalliberal

    I think there is a sense of the country that there is a need for reality thinking, part of which is the new normal absent the shadow banking ponzi scheme.

    His success at JP Morgan is in part due to the previous managment having the risk evaluation capability to know that the subprime securitization was unsustainable. He also had ability as a manager to focus on cost cutting to make the JP Morgan Chase combination viable. In the end, he had cash to take advantage of picking up the failed comapnies for cheap prices and probably is integrating these entities together like Citi should have been.

    So – he is a successfull banker – is he good at policy, government and international relations? The confirmation process for a new Treasury will be intense. Similarly, I think the Fed confirmaton will/should be intense.






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