Geithner Takes Treasury Post

WASHINGTON–Timothy Geithner, a key player in the American International Group bailout arrangements, was sworn in as the nation's 75th Treasury secretary last night immediately after winning Senate confirmation of his nomination.

Confirmation of Mr. Geithner, former president of the New York Federal Reserve Bank, was delayed several weeks after it was disclosed that he had failed to pay taxes on his earnings while serving as a top official of the International Monetary Fund from 2001 to 2004.

President Obama was present when Mr. Geithner took the oath of office at the Treasury Department.

Mr. Geithner, 47, served as undersecretary of the Treasury for international affairs during the Clinton administration.

As president of the New York Federal Reserve Bank, he has been a key player in the government's response to collapsing financial institutions and the housing and credit markets since last summer.

Last September, Mr. Geithner was instrumental in the decision to bail out American International Group as well as in setting the terms for the bailout and bringing in former Allstate CEO Edward Liddy to head it.

The New York Fed is also overseeing the government's 79.9 percent ownership of AIG, and recently designated a three-member team of U.S. business leaders to manage the nation's investment in AIG while it sells assets to pay off the government's loan, which at one point ran as much as $160 billion.

In comments after he was sworn in, Leigh Ann Pusey, incoming president of the American Insurance Association, congratulated him on his confirmation.

She added, “As Congress and the administration move to create new oversight of the financial sector, we are eager to engage with him and his team in a constructive dialogue about how best to modernize and reform our regulatory structure.”

In her statement, Ms. Pusey noted that reforming the system and putting in place the proper oversight will not be an easy task. She said, “Despite entrenched federal oversight of the other key financial services sectors, for the insurance industry there is currently no federal regulator or even an office where a basic expertise on insurance matters exists.”

“We are confident that Secretary Geithner has a deep appreciation for the critical role that the insurance industry plays in the broader financial services arena and our economy.”

As a result of his tax problems, the vote on his confirmation was 60-34. Ten Republicans supported Mr. Geithner, while three Democrats and one independent voted no.

The incoming administration's vetting process determined that he had failed to pay federal taxes for Social Security and Medicare.

He paid the taxes for 2003 and for some compensation in 2004 after the Internal Revenue Service audited him in 2006, but the statute of limitations had run out on the 2001 and 2002 liabilities.

Mr. Geithner paid those in November after Obama officials vetting his potential nomination raised the matter. He insisted he had made a stupid but innocent mistake, and had been advised in 2004 by an accountant that he did not owe the self-employment taxes.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, managed the confirmation process for Mr. Geithner and later voiced strong support for him.

Sen. Baucus said, “President Obama's economic team has the right mix of talent and experience to protect taxpayer dollars and quickly and safely guide the economy back on course.”