Obama officially names Geithner next US Treasury secretary

US President-elect Barack Obama has officially named Timothy Geithner, president of the Federal Reserve Bank of New York, as his appointee for US Treasury secretary.

In a move that was widely expected, Geithner will replace Hank Paulson as the US's top economic legislator when the Obama administration takes control at noon on January 20, 2009.

In making the announcement, Obama heaped praise on Geithner's "unparalleled understanding of our current economic crisis in all of its depth, complexity and urgency" and pointed to his "stellar performances and outstanding results at every stage of his career. Tim has earned the confidence and respect of business, financial and political leaders around the world."

Geithner, who has been in his current role as head of the New York Fed since November 2003, has forged a career in financial policy-making, in contrast to Paulson, who spent 32 years at investment bank Goldman Sachs.

Geithner joined the Treasury Department in 1988. He rose through the ranks to reach undersecretary of the Treasury for international affairs by 1999, where he worked under former Treasury secretary Lawrence Summers - who will take over in January as director of the National Economic Council.

Subsequently, Geithner joined the International Monetary Fund in 2001, where he was director of the policy development and review department for two years before returning to the Fed as president.

Intimately involved in the world of derivatives and structured finance, Geithner has been a driving force behind efforts to establish a central counterparty for credit default swaps in recent years, liaising with interested parties in the private sector - in the form of the Operations Management Group - and testifying before Congress on the progress being made.

He has also been a central figure in the regulatory response to the credit crisis. In March, as Bear Stearns headed towards collapse, it was Geithner who approached JP Morgan chief executive Jamie Dimon to engineer an eleventh hour rescue, putting up the New York Fed's own money to back-stop up to $29 billion in losses to seal the deal.

More recently, Geithner tried to conjure a similar rescue for Lehman Brothers in mid-September, hosting a weekend of intense meetings in Lower Manhattan in an attempt to broker a deal to save the collapsing dealer. With no offer of government backing, however, the meetings achieved little other than the acquisition of Merrill Lynch by Bank of America.

Geithner's first job as Treasury secretary will probably be to decide whether a $25 billion relief package should be extended to Detroit's big three automakers - Ford, General Motors and Chrysler. Also on the agenda will be how to allocate the remaining $60 billion in cash from the first half of the Troubled Assets Relief Programme, and whether to ask Congress to release the remaining $350 billion.

See also: CDS clearing house to miss November 30 deadline
BoA's decision sounded death knell for Lehman
New York Fed extends back-office targets