While Geithner has taken dramatic steps to address flashpoints in the economy, the work of carrying out those policies has bogged down because critical decisions about how to do so aren’t being made, interviews with a broad range of federal officials show.
Government officials, inside the Treasury and out, say the unresolved issues are piling up in part because of vacancies in the department’s top ranks. But some of the officials also cite the Treasury’s ad-hoc management, which is dominated by a small band of Geithner’s counselors who coordinate rescue initiatives but lack formal authority to make decisions. Heavy involvement by the White House in Treasury affairs has further muddied the picture of who is responsible for key issues, the officials add.
One of the department’s signature initiatives, considered vital for getting at the root of the financial crisis, aims at relieving banks of their toxic assets. But to those familiar with the program, it remains unclear who will decide some of the practical details, such as whether foreign firms will be allowed to participate in the funds that buy the assets. This uncertainty is slowing the rollout of the program, which in any case has proven daunting to design. Announced in early February, it may not launch until July, officials say.
If you thought the administration had resolved the issue of what American International Group execs should be paid, you thought wrong. Treasury is also yet to decide whether to pay ousted General Motors chief G. Richard Wagoner Jr. his $20 million severance package.
It might have been hoped that someone would be answering the phones at the Treasury Department by now, but perhaps this level of disorganization is not surprising in an administration whose head has virtually no experience running anything.
Aside from the issue of basic competence, the common thread running through the current batch of issues is the Obama Administration’s cavalier attitude toward contracts and the rule of law. The administration has had problems getting lenders to participate in the supposed keystones of its economic agenda — the Term Asset-Backed Securities Loan Facility and the Public-Private Investment Program — because lenders no longer trust that Obama and the Democratic Congress will not change the rules in midstream for reasons of political expediency. Geithner’s disorganized dithering only adds to the uncertainty that undermines economic recovery.