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Geithner Said to Advise Obama on Choice of Fed Chairman

Former Treasury Secretary Timothy Geithner
Former Treasury Secretary Timothy Geithner has told current and former administration officials that neither he nor his wife, Carol, will consider returning to Washington service, said two people familiar with the matter. Photographer: Andrew Harrer/Bloomberg

Aug. 2 (Bloomberg) -- President Barack Obama is consulting with former Treasury Secretary Timothy Geithner on whom to nominate as the next chairman of the Federal Reserve, according to two people familiar with the matter.

Obama has accepted, for the time, Geithner’s insistence on serving only as a counselor for who should get the job, instead of becoming a candidate for it, according to the people, who requested anonymity. Geithner has told current and former administration officials that neither he nor his wife, Carol, will consider returning to Washington service, said the people.

Geithner has a long history with one of the candidates Obama has mentioned, former Treasury Secretary Lawrence Summers.

Geithner’s role in the selection process doesn’t give Summers a clear advantage over either of the two other candidates whom Obama told Congress that he’s considering, former Fed Vice Chairman Donald Kohn and the current vice chairman, Janet Yellen, one of the people said.

A White House spokeswoman, Amy Brundage, declined to comment. Jenni LeCompte, a spokeswoman for Geithner, also declined to comment.

Fed Chairman Ben S. Bernanke’s second four-year term expires on Jan. 31. He hasn’t said if he’d consider staying for another term.

Familiar Role

Geithner is playing a familiar role in the process. As Treasury secretary in 2009, Geithner was a key adviser when Obama decided to reappoint Bernanke. At that time, Geithner argued for continuity at the Fed in a time of market turmoil, a view which ultimately prevailed, according to another person.

Geithner didn’t recommend Summers, with whom he clashed in policy discussions earlier in Obama’s presidency, according to the person, who also requested anonymity.

Obama’s and Geithner’s relationship was forged first during the initial financial crisis and then as the Obama administration worked to prevent the collapse of the Euro. They also developed a personal friendship.

In the course of his first term, Obama dissuaded Geithner from leaving twice.

To contact the reporters on this story: Hans Nichols in Washington at hnichols2@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net; Peter Cook in Washington at pcook6@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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