And the New York Fed's New Boss Is...
By Rich Miller
At first glance, Timothy F. Geithner looks to be an odd choice to head the New York Federal Reserve Bank. He doesn't have a PhD in economics. He's not a banker. And even his friends admit that the long-time Washington policymaker lacks the gravitas normally associated with what is, after all, the second most powerful position within the Fed.
However, as BusinessWeek Online reported earlier on Oct. 15, the 42-year-old Geithner is getting the job, which has been empty since June, when former New York Fed President William J. McDonough left to lead the Public Company Accounting Oversight Board. In the afternoon of Oct. 15, the New York Fed announced Geithner's appointment.
If you take a closer look at his record, it's not hard to see why Geithner is taking over. In stints first at the Treasury Dept. and lately at the International Monetary Fund, he has earned a reputation as a cool crisis manager with an ability, in the words of one former colleague, "to see around corners" and anticipate problems before they happen.
FED'S FACE ABROAD.
Geithner, who served briefly early in his career as Treasury attaché in Tokyo, is known internationally as a smart negotiator with an ability to get his way without rancor. Those are all skills that should serve him in good stead in his new job.
As the central bank's point person to Wall Street and the city's money-center banks, the New York Fed president acts as de facto crisis manager if the financial system gets in trouble. He's also the Fed's top representative abroad, regularly attending meetings of the world's leading central bankers in Basel, Switzerland. Most important, though, the New York Fed chief is vice-chairman of the central bank's Federal Open Market Committee, which sets interest rate policy.
A one-time protégé of former Treasury Secretary and now Harvard University President Lawrence H. Summers, Geithner first made his mark in 1995, when he worked behind the scenes to help engineer a turnaround in the U.S. dollar after it hit record lows against the yen. A political independent, he later played a key role in Treasury's efforts to contain the 1997-98 Asian financial crisis. It was during those dangerous times that he earned the respect of his new boss, Fed Chairman Alan Greenspan.
Geithner wasn't the New York Fed's first choice for the job. Stanley Fischer, the IMF's former No. 2 who worked closely with Geithner and others at Treasury during the Asian crisis, was. But the well-respected economist elected to stay at his high-paying post at Citigroup (C ) instead. While Geithner undoubtedly lacks Fischer's in-depth knowledge of the U.S. economy, he's a fast learner whose career has continually shown he's not one to be underestimated.
Miller covers the Federal Reserve for BusinessWeek in Washington
Edited by Beth Belton