12:01 AM ET 3/26/09 | Marketwatch
NEW YORK (MarketWatch) -- Timothy Geithner just may get it after all. You can be forgiven if you didn't see it coming.
When it was disclosed that he had failed to pay thousands in income taxes, he was belittled as a tax dodger and financial simpleton who needed TurboTax to navigate the tax code.
When he announced the Treasury Department's plan for cleaning up the banking crisis, he was lambasted for being too downbeat in his outlook and for not giving us enough details.
The spectrum of opinions on Geithner ranged from clueless numbskull to Wall Street patsy.
As the weeks dragged on after that initial bailout bombshell, Geithner appeared defeated. He was stressed and fumbling in public. He didn't address the big questions head-on. He looked dazed and confused. His own boss, the president, waited a long time to come to his defense.
Then came the disclosures that the biggest bad guys of the financial crisis, the employees of American International Group Inc.'s (AIG) WMD lab -- its financial-products division -- would get $165 million in bonuses in a deal that Geithner either signed off on or missed. For many Americans, this was the last straw.
Can you say "dead Treasury secretary walking"? Tim Geithner was a corpse being dragged down Wall Street.
The revival
Then he came to life.
For all the anguish and steady defeat the financial crisis has given us, it's had plenty of unexpected plot twists. The fall and rise of Tim Geithner may be the biggest of them all.
Faster than Geithner seemed to be going down with the financial ship, he now appears to be confidently leading us to shore.
Geithner is the face of this week's market rally. He looks more self-assured. There's Tim Geithner writing an op-ed in The Wall Street Journal. There's Tim Geithner assertively announcing the "bad bank" plan. He's poised testifying before Congress. He's self-possessed when answering withering questions from journalists.
And the president?
"I have complete confidence in Tim Geithner and my entire economic team," Obama told reporters March 18. "Nobody's working harder than this guy. You know, he is making all the right moves in terms of playing a bad hand."
On "The Tonight Show with Jay Leno," Obama said the gloomy Geithner was in fact handling the pressure with "grace and good humor." Suddenly, the Harry Potter of the U.S. Treasury wasn't an overmatched kid against a financial crisis that's not been named; he was, in the words of the president, "a smart guy ... calm and steady."
Pushing the advantage
Geithner clearly has had some help. Bullish comments from Vikram Pandit, chief executive of Citigroup (C), and counterpart Ken Lewis at Bank of America Corp. (BAC), about their respective institutions' profitability this year clearly boosted confidence.
Ultimately, it's the details of the "bad bank" plan that gave the market hope that we may have turned the corner in containing the financial debacle.
It's not that the Treasury plan is perfect. Far from it. There are too many interests it attempts to satisfy: the government, banks, taxpayers and private investors. Someone is going to get the short end.
But now that there's a clear approach to unloading -- and, more importantly, attaching a price to -- all the bad stuff, investors are betting that any action is better than standing still and waiting for the first-quarter bank financial reports to deliver more write-downs.
Geithner has gone from the geek with egg on his face to the cool egghead.
Now with the support of Federal Reserve Chairman Ben Bernanke, Geithner is pressing the advantage. He unveiled promised legislation Wednesday that would give him broader powers to seize financial institutions whose failure would threaten the economic system. See full story on Geithner's plan for 'too big to fail' companies.
Political animal
The power grab is likely to stick in the craw of anti-government, free-market types who rightfully worry that Uncle Sam is overstaying his visit to Wall Street.
What they need to remember is that the government is not only an unwelcome guest; it's a reluctant traveler. Wall Street's despair is of its own making. Had it not threatened to bring down the rest of us with it, the government might have been justified in watching Citigroup and AIG burn in the same way it's keeping General Motors Corp. (GM) and Ford Motor Co. (F) a contained blaze.
Geithner finally seems to understand the delicate political tightrope he must navigate to push through his rescue plans. He must be tough on bonuses. He needs to protect the taxpayer. He has to be positive. That's why he sold the plan's details through multiple media outlets this week -- and sold them well.
His transformation has been so stunning that it almost makes you wonder why, if Geithner can turn it around, we can't turn around this financial mess.
It's going to take a lot of magic, Mr. Potter.
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