Politics on the Hudson

Here’s the text of Sen. Chuck Schumer’s statement on Timothy Geither that was released by his office:

Thank you Mr. Chairman. It is my privilege to be here today to introduce Timothy F. Geithner as President Obama’s nominee to be Treasury Secretary. In these times, as our financial system is sailing into uncharted and turbulent waters, there is no navigator more suited for this job by way of intelligence, experience, inclination and temperament than Tim Geithner. Tim has made some mistakes, which he has freely admitted and corrected, but these errors pale before the myriad mistakes made by the operators of financial institutions and government regulators overseeing them. We need the very best, not the second best, person at Treasury to correct these mistakes.

Tim’s career in government began 20 years ago as a staffer at Treasury. His abilities quickly launched him up the career ladder, and by the mid-1990s, he was a senior crisis manager with then Secretary Rubin and then-Deputy Secretary Summers and helped guide the U.S., and indeed, the global, financial system through a series of international financial crises, including the Asian financial crisis in 1997 and 1998.

For the past six years, Tim has served as the President of the Federal Reserve Bank of New York. From that position, he’s tried to raise awareness of the risks posed to the economy by the current crisis and to call Congress’ attention to the inadequate powers and authorities of the Treasury Department and Federal Reserve to deal with this economic maelstrom and brave new economic world.

Far before many other regulators, Tim had recognized the extent of the danger that our economy faced, and was trying to raise awareness. In the aftermath of the Bear Stearns failure, Tim noted that the current crisis was so severe that it was “…not something that the market can solve on its own.” And in July he called on Congress to establish a legal framework for dealing with the failures of non-bank financial institutions. Had we heeded his advice then, the Treasury Department and Federal Reserve might not have faced the failure of Lehman Brothers with an empty regulatory toolbox.

Tim has also been a leader on financial regulatory reform. In September of 2006, he led other regulators in calling for enhanced regulation of hedge funds. In April of 2008, Tim called for a major overhaul of the system, not just in structure, but also in the way regulators do their jobs, and the policies that we implement to ensure stability. He noted that “our objective should be a system that preserves the unique strengths of our financial markets in providing individuals and entrepreneurs access to capital and credit, but with a greater capacity to withstand stress.”

However, as he takes on this monumental position, there are a few things that he must keep in mind.

First, he must lead the Treasury Department in a full reexamination of the TARP program, and the other governmental responses to the crisis, to ensure that they are achieving their goals of ensuring stability, promoting lending, and protecting taxpayers. The bank rescue plan, as initially implemented, gave the banks too much dessert before it made them eat any of their vegetables. Secretary Geithner must be the responsible parent and restore some balance to this situation. I have confidence he will.

Second, and we know he’ll do this, since he’s already started, Tim must lead a national, and in fact, an international conversation about the structure and function of financial regulation. Without major reforms to the way that we and others oversee financial institutions, the history of the last 18 months is doomed to repeat itself.

Finally, and perhaps his most difficult task of all, Tim must help guide the U.S. economy back onto stable long-term footing. The satirical newspaper, The Onion, recently ran a headline that struck a nerve with me, because I think it’s all too true. It read “Recession-Plagued Nation Demands New Bubble To Invest In”. The fact of the matter is that for too long, this country has relied on easy credit to support its growth. We need to redevelop stable long-term industries that can survive the ups and downs of the business cycle. We need to reinvigorate American manufacturing, stimulate American savings and end our national addiction to debt. We cannot be a country that imports more than it exports, spends more than it saves, consumes more than we produce. It will not be easy, but I’m confident that if we commit ourselves to this task, with Tim’s hand on the tiller, American will emerge as the strongest nation on the planet for the next 50 or 100 years.

In closing Mr. Chairman, Tim faces a daunting set of challenges and tasks, but he is a uniquely qualified candidate for this position, and I’m proud to say that I will support his nomination. I would like to close by thanking him for his willingness to continue serving his country in these troubled times. God knows that he’s paid his dues and then some, over the past 18 months, not to mention the past 20 years, and while, he could easily go to the private sector and work less hours, for more money than he will make as a simple government employee, he has chosen to accept the challenge that President Obama presented to all of us, and to continue to devote himself to serving his country, and striving to make the world economy a better and safer place. For that I commend him. Thank you Mr. Chairman.