Timothy Geithner is a smart guy. His work during the banking meltdown of 2008 no doubt helped stave off an even more severe financial crisis. And now, he needs to move on from his role as Secretary of the United States Treasury.
The need for Geithner’s departure has nothing to do with his April 2011 statement that there was no way the United States would ever lose its AAA credit rating. Yes, that was stupid, but it doesn’t deserve firing. Of course there was a way he could have foreseen a failure to pass a debt limit deal that would have avoided this. All he had to do was look at the grid lock in Washington and project.
Nor does Geithner need to go because Standard & Poor’s lowered the U.S. credit rating to AA+. If participating in that fiasco was the only criteria for losing one’s job, there would not be enough people left in government to vote on a bathroom break.
Timothy Geithner must go for two reasons: (1) he’s expendable: and (2) he has become a distraction.
Geithner didn’t vote on a single debt proposal, and yet he played a significant role in the crisis.
This is what happens when coaches are fired. The coach isn’t on the field making the plays, and you would think that players would be committed enough to play hard for the common good. But when you can’t fire the team, you often fire the coach.
You can’t fire an elected official, and the public and financial markets want someone held accountable. It is unfortunate and perhaps even a little unfair. Sorry Tim, you need to go.
Don’t expect a real change in policy if he does leave. Remember, neither the President nor the Congress is changing. The Secretary of the Treasury can only recommend not vote. But, staying creates a distraction at a time when the American people need a laser focus on turning things around. Geithner is not at the center of the discussion, but he’s close enough to it that his presence provides a reason for those who should be making decisions to talk about him rather than solve the problem.
Getting the President Out of His Box
President Obama boxed himself in by declaring his support for Geithner. From a leadership perspective, it is not a bad thing to stand up for you staff member. It shows loyalty and an understanding that politics—not the decisions of the Treasury Secretary— were the primary cause of the debt ceiling standoff. If he fires him now, he looks indecisive. If he keeps him in his post, he appears stubborn and arrogant.
The best solution is for Timothy Geithner to resign. He shouldn’t resign immediately as some have demanded. He can’t simply quit and do nothing. That would create even more chaos in an extremely volatile environment.
This needs to be an orderly transition within the next few weeks. Geithner should resign to take a job somewhere else, and the President needs to immediately announce his replacement. If this plan is well-executed, the focus returns squarely to fixing the economy in a manner that creates confidence for a path forward.
The Leadership Lesson
In times of crisis, followers expect leaders to show that they are in control. That often means taking immediate action that is more symbolic than substantive.
No one knows the impact of the S&P ratings downgrade. It could be minimal or significant. What we do know is that there is growing sentiment that the economy is headed in the wrong direction. The President and leaders in Congress need to create that laser focus on creating the environment for real growth. Timothy Geithner needs to do his part by leaving.