In the six weeks since Mr. Geithner took over as Treasury secretary, he and a skeleton crew of unofficial senior advisers have been racing to make decisions that will shape the future of the banking, insurance, housing and automobile industries.
But even as he maintains a frenetic pace — unveiling plans, testifying before Congress and negotiating new bailouts with the likes of Citigroup, General Motors and the American International Group — there are signs that events are getting ahead of him.
Administration officials say they are postponing their plan to produce a detailed road map for overhauling the nation’s financial regulatory system by April, in time for the Group of 20 meeting in London. Though officials say they will still develop basic principles in time for the meeting, the plan will not include much detail.
Treasury officials are also still scrambling to decide details of their plan to buy up as much as $1 trillion in toxic assets from the nation’s banks, one month after being widely criticized for presenting a plan that lacked any specifics on how it would work.
Analysts say it is far too early to know if Mr. Geithner and his team will be effective. But some worry that political and financial constraints have made them reluctant to grapple with the full magnitude of the crisis.
Many financial experts estimate that the nation’s banks are holding as much as $2 trillion in troubled assets, most of it tied to mortgages. By contrast, the Treasury has less than $300 billion left in the financial rescue plan that Congress reluctantly approved last year.
To avoid asking Congress for more money, Mr. Geithner has been trying to stretch government money by working with private investors, the Federal Reserve and government-controlled companies like Fannie Mae and Freddie Mac, the mortgage giants. But that has introduced other tough policy issues, many of which remain unresolved.
“Their huge problem is that the American public is not willing to accept large losses for large financial institutions,” said Vincent Reinhart, a former Fed official and senior fellow at the American Enterprise Institute, a conservative research and lobbying organization. “Everything they are doing is about having the smallest possible footprint on the federal budget. They don’t want to engage the Congress and they don’t want to engage the American people in that discussion.”
Compounding the strain on the Treasury, almost all the top posts beneath Mr. Geithner are still vacant. Though he has hired about 50 senior advisers — about half the number he hopes to recruit — the White House has become so worried about potential tax problems and other issues in the backgrounds of candidates that it has nominated only a handful of people.
On Sunday, the White House announced that it would nominate Alan B. Krueger, an economist at Princeton, to be assistant Treasury secretary for economic policy. It will also nominate David S. Cohen to be assistant secretary for policy on terrorist financing and Kim N. Wallace as assistant secretary in charge of Congressional relations.
That still left many positions, including the No. 2 post at Treasury, without even a nominee.
Mr. Geithner, as a result, has been pulled in many directions at once and remains virtually the only public face of the Treasury. He is the sole person who can go before Congress to promote and defend the department’s decisions to provide billions of dollars for General Motors, Chrysler, the nation’s banks or the millions of homeowners facing foreclosure.
“The problem is not with policy development and implementation,” said one senior official who is among the many aides to Mr. Geithner awaiting nomination. “The problem is with getting out there in the world and talking about it. Other than Geithner, there’s nobody else to make the case in public for these policies.”
The Treasury’s staff problems took another turn for the worse in recent days, when the administration’s preferred candidate for the No. 2 spot at Treasury, Annette L. Nazareth, withdrew her name from consideration.
Administration officials said Ms. Nazareth, a former top official at the Securities and Exchange Commission, did not have tax problems. Rather, administration officials were worried that political opponents would seize on her years as an S.E.C. commissioner and, before that, the agency official in charge of overseeing the markets. The S.E.C. has been harshly criticized for its lax enforcement.
To some extent, Mr. Geithner’s staff problems stem from his own failure to pay more than $32,000 in self-employment taxes. That slip-up not only embarrassed the Obama administration, which had prided itself on nominating people with unassailable backgrounds. It also nearly torpedoed his Senate confirmation, and caused White House officials to slow down the background checks for dozens of other nominees.
“Much of this is of Obama’s own making,” said Professor Paul Light, an expert on the White House appointment process who teaches at the Robert F. Wagner School of Public Service at New York University. “We’re now seeing a dramatic pendulum swing. This administration used a lot of political capital for getting some people through, and that created an issue for Republicans and late-night comedians.”
Of the four major federal departments — state, justice, defense and the Treasury — the Treasury has had the fewest nominees even though it is dealing with probably the most significant problems facing the government.
Despite it all, Mr. Geithner, who arrives at the Treasury around 5:30 each morning and exercises in the department gym before starting work, has not appeared daunted.
Seemingly relaxed and unflappable, he has appeared time and again at public events alongside President Obama and Vice President Joseph R. Biden. Last week, he testified about Mr. Obama’s tax proposals before three Congressional committees.
Outside the public eye, Mr. Geithner has been constantly on the move. He played a direct role in discussions about expanding the bailouts for Citigroup and A.I.G., negotiating with both companies while he jumped between public events.
By any normal measure, Treasury officials have been remarkably productive. In the last month alone, Mr. Geithner announced the outlines of a $2.5 trillion bank rescue plan; detailed a $275 billion plan to help homeowners with their mortgages; created a “stress test” to determine whether banks can withstand a serious downturn; and issued restrictions on executive pay at banks that receive federal money.
In addition, Treasury officials have played a central role in fashioning Mr. Obama’s budget — especially the tax portions, which would raise $1 trillion over the next 10 years, mostly through higher taxes on the wealthy and corporations. And Mr. Geithner was central in persuading Congress to free up the second $350 billion for the Treasury’s financial rescue program.
But these are anything but normal times. With the economy plunging into its deepest recession since the early 1980s, the Treasury has been put in charge of vast swaths of the economy, including rescuing the financial system, the housing market and the automobile industry.
The strains are showing. Many top Treasury aides often look haggard and acknowledge they are getting by on only a few hours of sleep a night. They often have to split their attention among wildly different projects.
For example, Gene Sperling, who served as director of President Clinton’s National Economic Council, was closely involved in discussions about the Obama tax plan, as well as the talks about the bank rescue plan and new limits on executive pay.
In carrying out analysis for its bank rescue plan, in particular a proposed “Public-Private Investment Fund” to buy up troubled assets, Treasury officials have leaned on the Federal Reserve and the Federal Deposit Insurance Corporation for help.
To carry out its $75 billion program to modify mortgages for families in danger of losing their homes, the Treasury is relying on Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies.
One of the few areas in which the Treasury has increased its staff is the all-important Office of Financial Stability, which ran the $700 billion financial rescue plan during the Bush administration. But that is because the Bush administration had hired almost 100 staff people by the time of Mr. Obama’s inauguration. Its director, Neel Kashkari, is a Bush holdover