June 26 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner has tapped Matthew Rutherford, a former aide at the Federal Reserve Bank of New York, to oversee efforts to finance a budget deficit set to exceed $1.8 trillion in 2009.

Rutherford, 31, is deputy assistant secretary for federal finance, a post that doesn’t require Senate confirmation. Rutherford is the Obama administration’s first formal appointment to manage the borrowing effort. He joins a domestic finance office at the Treasury that still lacks an undersecretary or assistant secretary for financial markets.

The appointment follows a surge in Treasury borrowing as officials seek to finance the record deficit: the department has boosted issuance of 30-year bonds and resumed sales of three- year and seven-year notes. Geithner has also sought to reassure China, the largest foreign holder of Treasuries, that its investments are safe.

Before taking up his current post on June 1, Rutherford was on loan from the Fed, working in the Treasury’s markets room, which keeps Geithner and other senior officials apprised of financial-market developments. Geithner is a former president of the New York Fed.

“During the whole first handful of months of the administration he was just terrific -- he knows these issues cold,” said Lee Sachs, a counselor to Geithner who has been overseeing domestic-finance issues. “He was helpful, thoughtful and made a real contribution in our financial-stability plan.”

Rutherford also has experience in Treasury debt management operations, serving in several advisory roles during his four years at the New York Fed.

In 2007, he co-wrote a research paper that concluded debt buybacks could be a useful part of the department’s strategy, even when the federal government is running budget deficits. The Treasury hasn’t conducted any buybacks since 2002.

To contact the reporters on this story: Rebecca Christie in Washington at Rchristie4@bloomberg.net;

Last Updated: June 26, 2009 17:15 EDT