WASHINGTON (AP) - Treasury Secretary Timothy Geithner is two
steps further away from filling the ranks of his senior staff.
As markets quake and Treasury confronts the worst economic
crisis in decades, Geithner has seen two people he had hoped to
name to key posts withdraw from consideration.
Annette Nazareth, a former senior staffer and commissioner with
the Securities and Exchange Commission, made "a personal
decision" to withdraw from the process, according to a person
familiar with her decision.
The decision followed more than a month of intense scrutiny of
her taxes and multiple interviews. No tax problems or other issues
arose during Nazareth's vetting, said the person, who requested
anonymity because Geithner's choice of Nazareth was never announced officially.
"She did put a great deal of consideration into the potential
of taking the position, and she concluded that she really enjoys
what she's doing now," this person said.
Though popular in policy circles, Nazareth has drawn criticism
for her role in creating what some considered to be lax oversight
of the banking industry.
Nazareth, 53, a partner at the law firm Davis Polk & Wardwell,
could not be reached for comment. Treasury and White House
officials said they would not comment.
Geithner has been criticized for staffing his department too
slowly as it grapples with a banking crisis that has crippled the
economy. Uncertainty about Treasury staff also has unnerved
Five weeks into his tenure, he has yet to name a single top
deputy or assistant secretary. This has left Treasury with too few
people authorized to make decisions or represent the department in
meetings with stakeholders.
After initially declining to comment, Treasury spokesman Isaac
Baker emailed a statement saying 50 political appointees at the
department already are hard at work.
"Any rumors of vetting problems or delays in the process are
simply not true," Baker's statement read.
The department has been meeting with members of the financial
services industry as it oversees the government's $700 billion
financial bailout and other parts of President Barack Obama's
financial stabilization plan.
But at a Senate hearing Thursday about failed insurance giant
American International Group Inc. - which has received four
separate bailouts totaling more than $170 billion - Sen. Chris Dodd
said he had asked Treasury for someone to appear, but that no one
"I am not pleased that we don't have someone here from Treasury
to explain what their role in this is," Dodd said.
Geithner's choice for undersecretary of international affairs,
Caroline Atkinson, also withdrew from consideration, the Wall
Street Journal reported Thursday.
Some at Treasury and other financial regulators had looked
forward to Nazareth's appointment. She is well-known in policy
circles and is close with Geithner and Obama economic team members,
including Paul Volcker, a former Federal Reserve chairman.
Nazareth joined the SEC in 1998 as senior counsel to
then-Chairman Arthur Levitt, later directing the Division of Market
Regulation. She is credited with creating numerous key policy
She created the voluntary program intended to supervise large
investment banks including Goldman Sachs, Morgan Stanley and the
now-defunct Bear Stearns and Merrill Lynch. The program was
canceled in September as the financial crisis erupted and the
remaining investment banks converted themselves into bank holding
Some on Capitol Hill had expressed concern that Nazareth was too
closely associated with the weak federal oversight that contributed
to the banking collapse. Among her responsibilities at Treasury
would have been overseeing the creation of a new regulatory system
for large financial institutions.
Geithner told a Senate panel Wednesday that he hoped "to come
up for the committee soon with a full slate of very strong
"We're doing this carefully, as you would expect, and ...
trying to make sure we have the best talent in the country," he
Geithner's lack of a senior staff has raised concerns on Wall
"This doesn't help confidence," said David Wyss, chief
economist at Standard & Poor's in New York. "Geithner is stuck
there all by himself trying to do everything. They don't have
anybody confirmed, and Treasury is a big shop to try to run with
one person, especially right now."
Wyss, who previously worked at the Federal Reserve, said the
administration needed to have made a much bigger push before taking
office to get people cleared to take over the top jobs at Treasury
so that Geithner could assemble his team quickly.
David Jones, head of Denver-based economic consulting firm DMJ
Advisors, said that Geithner's missteps in putting together a
financial rescue program and his inability to assemble a team at
Treasury were raising concerns about whether the new
administration's economic team is up to the challenges confronting
"There is no question that Wall Street is losing patience,"
said Jones, who for more than three decades served as a top
economist at a major bond trading firm. "If there was ever a time
when we need an effective and strong Treasury secretary, it is
Jones said that investors had initially viewed the economic team
that Obama was assembling favorably because it included experienced
hands such as Summers and Volcker.
"There were high expectations for this team, but at this time
of crisis, it doesn't seem to be functioning effectively," Jones
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