In the wake of Standard & Poor‘s downgrade of the United States’ credit rating for the first time in the history of the ratings, Treasury Secretary Timothy Geithner has decided to stick around after all. It had been widely reported over the last two months that Geithner, who also served as the President of the Federal Reserve Bank of New York during the U.S. government’s bailouts of Wall Street banks in 2008, was considering leaving the Treasury once a deal was made to raise the nation’s borrowing limit. However it has been reported today that at the request of President Obama, Geithner has decided to stay on in his position at the Treasury. Bloomberg reports:
“’Secretary Geithner has let the president know that he plans to stay on in his position at Treasury,’ Jenni LeCompte, assistant secretary for public affairs, said in a statement today in Washington. ‘He looks forward to the important work ahead on the challenges facing our great country.’
Geithner, the last remaining member of Obama’s original economic team, made his announcement after months of speculation over his future. He told White House officials this year that he was considering leaving once a deal to raise the nation’s borrowing limit deal was reached. Obama signed an increase in the limit on Aug. 2.
‘The President asked Secretary Geithner to stay on at Treasury and welcomes his decision,’ Jay Carney, the White House press secretary, said in a statement today.”
While odds of a double-dip recession are still high, some investors think Geithner should keep his post because disrupting the continuity of the administration’s economic policy could lead to greater investor concern.
“‘His leaving would have been viewed as negative following the S&P downgrade,’ said Drew Matus, senior U.S. economist at UBS Securities LLC in Stamford Connecticut.”
However many politicians have demanded Geithner’s resignation following the S&P downgrade of U.S. credit and the S&P 500 Index of stocks plummeting 7.2 percent to 1,199.38 over the last week.
Republican presidential candidate and Minnesota Congresswoman Michelle Bachmann spoke with Fox’s Greta Van Susteren when the downgrade news broke Friday, calling for Geithner’s resignation:
“I call on the president to seek the immediate resignation of Treasury Secretary Tim Geithner and to submit a plan with his list of cuts to balance the budget this year, turn the economy around and put our people back to work.”
“I’m very concerned that the administration tomorrow might look for anyone else to blame. They may blame the Tea Party, they may blame the ratings agency or anyone else. They knew it was coming this year in January but they didn‘t write a plan and they still don’t have a plan.”
AFP reports that Republican Senator Rand Paul called on Geithner to step down for what Paul’s office called a “gross mismanagement of federal economic policy and his role in the first-ever downgrade of United States debt.”
Over the last year Geithner pushed back the debt-limit increase date 4 times: March 31, April 15, May 31 and finally August 2.