Senate panel approves Geithner for treasury post

By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer

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WASHINGTON – The Senate Finance Committee on Thursday cleared the nomination of Timothy Geithner as treasury secretary despite unhappiness over his mistakes in paying his taxes.
The
committee approved the nomination on an 18-5 vote, sending it to the
full Senate for a vote which was expected to take place on Monday. President Barack Obama is hoping for quick approval so that the point man for the administration's economic rescue effort can begin work.
The
committee vote came a day after Geithner appeared before the panel to
apologize for what he called "careless mistakes" in failing to pay
$34,000 in taxes earlier in the decade, when he worked at the
International Monetary Fund.
Geithner paid the back taxes plus interest for the years 2003 and 2004 after being audited by the Internal Revenue Service.
But he did not pay taxes he owed for 2001 and 2002, even though he had
made the same mistakes for those years, until shortly before he was
nominated by Obama last November to be treasury secretary.
The nomination was expected to win approval by the full Senate, with many lawmakers saying that given the serious economic crisis facing the country, the new president deserved to have the services of a man of Geithner's abilities and experience.
Presidential press secretary Robert Gibbs told reporters at the White House
that Obama was very pleased with the committee vote in support of
Geithner. He said Obama "will make decisions shortly" on the overhaul
of the financial rescue program to meet widespread objections.
Gibbs said the administration's changes would include restrictions to limit executive compensation
at banks receiving support from the government and stronger
requirements that banks use the government support to boost their
lending to households and businesses.
"The
president will do everything possible to prevent a financial
catastrophe, to ensure the working of the financial system, to get
credit and lending moving again," Gibbs said.
Geithner has been the head of the Federal Reserve Bank of New York for the past six years and was a key participant in decisions made by the Bush administration to deal with the worst financial crisis to hit the country since the Great Depression.
All five of the "no" votes on the committee came from Republicans, including the top GOP member of the panel, Sen. Charles Grassley, R-Iowa. Those voting no said that they did not believe Geithner had been candid in his answers on why he failed to pay Social Security and Medicare taxes. They said they viewed this as a serious error for an official who would head the agency that oversees the IRS.
"I am disappointed that we are even voting on this," said Sen. Michael Enzi,
R-Wyo. "In previous years, nominees who made less serious errors in
their taxes than this nominee have been forced to withdraw."
Even Democrats who voted for the nomination said they were disappointed in Geithner's actions.
Sen. Kent Conrad, D-N.D., said that in normal times he would oppose Geithner but "these are not normal times."
The
committee acted on an expedited basis, voting shortly after Geithner
submitted to the panel 102 pages of answers to written questions
committee members had posed after Wednesday's hearing.
In
response to one of those questions, Geithner pledged that the Obama
administration would carry out reforms in the $700 billion financial
rescue program. The Bush administration was widely criticized for
distributing the first $350 billion from the fund with not enough
attention paid to ensuring that banks receiving the money would use it
to increase lending. Former Treasury Secretary Henry Paulson
had earmarked $250 billion of the first $350 billion to go to
purchasing stock in banks as a way of bolstering their balance sheets.
In
answer to one of the committee's questions, Geithner said the new
administration planned to require that banks receiving government
support "provide detailed and timely information on their lending
patterns, broken down by category." Geithner said that public companies
will be required to report this information on a quarterly basis.
Last week, the Senate rejected an effort to block release of the second $350 billion from the rescue fund.
During
his testimony on Wednesday, Geithner said the new administration would
release a comprehensive plan within a few weeks providing details on
how it planned to combat the financial crisis and current recession, which is already the longest in a quarter century.

Geithner did not go into detail on what might be in that program but he
acknowledged that the administration is considering buying toxic assets
now weighing on the balance sheets of many banks.
In addition to deploying the second half of the $700 billion
bailout fund, the administration is pushing Congress to quickly pass an
$825 billion-plus economic stimulus program of tax cuts and increased government spending to jump-start the economy.