By Silla Brush and Sam Youngman - 11/20/09 11:00 AM EST
Treasury Secretary Timothy Geithner is coming under new pressure from conservative Republicans and liberal Democrats to resign.
Reps. Peter DeFazio (D-Ore.) and Kevin Brady (R-Texas) this week joined a small group of lawmakers publicly calling for Geithner to step down. Former Republican Rep. Rob Simmons, who is challenging Sen. Chris Dodd (D) for Senate in Connecticut, has made Geithner’s resignation a campaign issue.
DeFazio emphasized that there are growing concerns about Geithner among “populist” House Democrats, who have always been cautious about the Treasury secretary.
The liberal Huffington Post ran an op-ed on Tuesday with this headline: “Geithner is ‘Obama’s Rumsfeld.’ ”
The White House stands firmly behind Geithner as the administration navigates the perilous debate over government bailouts for Wall Street and an economy wreaking havoc on Main Street.
Last month the unemployment rate hit a 26-year high of 10.2 percent, sending Democrats in search of new ways to bolster the economy and create jobs. It also comes as voters hear Wall Street banks announcing record bonuses.
“Secretary Geithner has helped steer the American economy back from the brink, and is now leading the effort on financial reform,” Jen Psaki, White House spokeswoman, told The Hill. “His focus today — and ours — is on economic recovery and addressing the challenges the American people face every day. We invite anyone with good ideas, whether they agree with us or not, to be a part of the productive effort toward a solution.”
This week’s criticism was sparked by a report from Neil Barofsky, the special inspector general over the $700 billion bailout program. Barofsky concluded that officials at the Federal Reserve, including Geithner, who was head of the New York Fed, made a series of missteps in the bailout of American International Group (AIG).
Barofsky faulted Fed officials, including Geithner, for a negotiating strategy regarding the firm’s complex derivatives that “offered little opportunity for success.” The report said that the Fed paid full value to settle the derivatives contracts, which meant tens of billions of dollars went to the big American and foreign banks that were AIG’s counterparties in the deals.
Republicans seized on the report as further evidence that Geithner must step down. Republican Reps. Spencer Bachus (Ala.) and Roy Blunt (Mo.) are calling on the House Financial Services Committee to hold a hearing investigating the AIG bailout.
During a fiery exchange at Thursday’s Joint Economic Committee hearing, Brady recounted how the nation was suffering through one of the worst economies in decades and the Obama administration’s policies had failed to change that course. He then asked Geithner to resign.
“For the sake of our jobs, will you step down from your post?” Brady asked, saying that Geithner and the administration’s economic policies have “failed.”
Geithner defended himself, saying that the steps taken last year at the height of the crisis were necessary and that the economy has improved.
“I agree with almost nothing of what you said,” replied an incensed Geithner, charging that President George W. Bush’s leadership was to blame for the country’s financial woes.
“If you look at any measure of the strength and stability and health of the American economy, if you look at any measure of confidence in the financial system, it is substantially stronger today than when the president of the United States took office,” Geithner said.
Rep. Elijah Cummings (D-Md.) and six other House Democrats are seeking a comprehensive review of the Federal Reserve following Barofsky’s report.
But while Cummings has been critical of the Fed, he has not sought Geithner’s resignation.
“I’m glad you’re there,” Cummings said on Thursday. “I don’t know how many people could stand the pressure you’re dealing with.”
That was a view echoed by Sen. Bob Casey Jr. (D-Pa.): “I voted for your confirmation. And it was the right vote.”
But some Democratic senators have also expressed concern with Geithner this month. During an interview with MSNBC on Nov. 2, Sen. Maria Cantwell (D-Wash.) said she was “not sure” why Geithner still held his job. Cantwell called Geithner’s financial overhaul plans “appalling.”
Tony Romm contributed to this article.