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Just the name Geithner made stocks soar. Why?

Kevin G. Hall and Margaret Talev | McClatchy Newspapers • Published November 21, 2008

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WASHINGTON — New York Federal Reserve Bank President Timothy Geithner is expected to be President-elect Barack Obama's choice to head the Treasury Department. Reports of his selection sent stocks soaring at the close of trading Friday.

The anticipated nomination, which the financial cable channel CNBC and The Wall Street Journal reported shortly before the New York Stock Exchange's closing bell, sent the Dow Jones Industrial Average up nearly 500 points, or 6.5 percent, in the final hour of trading after two days of steep declines.

Obama's transition team and the Federal Reserve declined to confirm that Geithner had been offered and accepted the post, but neither made any attempt to knock down the reports. Obama now is expected to name his full economic team before Thanksgiving.

Geithner, 47, has worked at Treasury for two decades. He joined Treasury in 1988 and climbed the ranks, topping out as undersecretary for international finance from 1999 to 2001. Since 2003, he's headed the New York Fed, one of the most powerful yet little known federal regulatory posts.

"He's a great appointment. He's smart. He's got continuity," said Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee. "I think he understands the importance of good regulation that is tough without stifling initiative."

Alan Blinder, a former Fed vice-chairman, echoed that sentiment, saying that Geithner "brings to the job intelligence, a wealth of experience in crisis management, deep knowledge of everything that has been going on in the last year, and an ability to listen and learn." Blinder, a Princeton University economist, added: "The struggles that any new secretary of the Treasury would face are legion. Tim is coming in down five runs in the eighth inning."

The president-elect has been under pressure to start rolling out his Cabinet picks in the face of continued turmoil on Wall Street and stepped-up speculation and leaks.