Lew enters Treasury fray with larger hurdles than Geithner
U.S. Treasury Secretary Timothy F. Geithner, the most senior Obama administration official remaining from the team that grappled with the worst financial crisis since the Great Depression, left office Friday as his likely successor seeks Senate approval.
Geithner, 51, hands a more stable economy to Jack Lew, President Barack Obama's nominee, as the administration bounces from one confrontation to another with Republican lawmakers on issues including the budget and the debt ceiling. Geithner hasn't said publicly what his next career move will be.
As Obama's former budget chief, Lew "is going to have a harder time than Geithner" in dealing with Congress, said Joseph Engelhard, a former Treasury official who is now senior vice president at Capital Alpha Partners LLC, a Washington-based consultant and investment advisory firm. "Probably the most polarizing question on Capitol Hill right now is when are they going to balance the budget."
The House of Representatives voted this week to suspend the $16.4 trillion federal borrowing limit until May 19, removing for now the most contentious fiscal issue facing Obama. Republicans are trying to prompt the Democratic-controlled Senate to approve an annual budget, something it hasn't done in four years, by withholding lawmakers' pay if a spending package isn't passed by April 15.
Deputy Treasury Secretary Neal Wolin will be acting secretary after Geithner left Friday. Wolin, 51, was a key negotiator with Congress on the Dodd-Frank financial overhaul law. He's a former chief operating officer of Hartford Financial Services Group Inc. and was a legal adviser to the White House National Security Council during President Bill Clinton's administration.
Lew, 57, has been meeting this week with senators who will vote whether to confirm him. The Senate Finance Committee, which has jurisdiction over Lew's nomination, hasn't set a date for a confirmation hearing.
Senate Democrats including Finance Committee Chairman Max Baucus of Montana and Charles Schumer of New York said they will support Lew. Republican Senator Jeff Sessions of Alabama has said he will oppose him and Utah's Orrin Hatch, the Finance Committee's ranking Republican, said he hadn't decided.
Lew is less familiar than Geithner with financial regulatory issues such as systemic risk and the so-called Volcker rule ban on proprietary trading, said Brian Gardner, a senior vice president and Washington analyst at investment bank Keefe, Bruyette & Woods. The rule is named for former Federal Reserve Chairman Paul Volcker, an early proponent.
"By the time he gets to the Senate Finance Committee he will have been fully prepped on all this and no one will notice that he doesn't have a long history," Gardner said. "I would be very surprised if he fumbled anything."
While the budget is "going to be front and center," Lew also will have to address how he plans to deal with foreign-currency issues such as how hard to press China on strengthening the yuan, said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. Lew will probably continue Geithner's approach of quiet diplomacy rather than confront China, he said.