Tim Geithner’s confirmation hearing will be held Wednesday. The members of the Senate Finance Committee will ask him lots of tough questions about his tax forms and maybe even the financial bailouts he orchestrated as president of the Federal Reserve Bank of New York. Some will raise their eyebrows disbelievingly at his answers. A few will say harsh things about his carelessness. Then they will vote to confirm him as Treasury Secretary. At least, that’s what everybody expects will happen.
Why is this? It’s partly that Geithner’s big mistake—failing to pay his Social Security and Medicare taxes while working for the International Monetary Fund earlier this decade—is apparently common among U.S. employees of international organizations. It may be partly because he’s a boy. But mainly it’s that the global financial system is showing signs of falling apart again and getting a strong, competent leader into the corner office at Treasury—pronto—has become something of a bipartisan national priority. Heck, I wouldn’t be surprised if Tuesday’s 5.28% fall in the S&P 500 just boosted Geithner’s likely approval margin by a few votes.
This reminds me a lot of what University of Illinois law professor Larry Ribstein has dubbed the Apple Rule. As Ribstein put it in January 2007:
It’s become clear by now that a major job for our legal system is trying to figure out a way that we can simultaneously (1) punish those greedy backdating wrongdoers; and (2) keep Steve Jobs out of jail.
Ribstein later defined the rule thusly:
The Apple Rule provides for an exception from corporate criminal liability when a popular business executive is accused of, or presides over a company that is accused of, misconduct. “Popular” is defined as “liked by journalists.”
That last part is incorrect. Journalists—at least the ones who’ve actually had to deal with Steve Jobs—don’t like him at all. But they, and everybody at the SEC and the Justice Department, were/are aware that Jobs might actually be that rarest of creatures: an indispensable CEO (we may be about to find out just how indispensable). And because Apple is a big, successful, beloved company, everybody involved was/is extremely wary of toppling its indispensable boss for an offense that, while real, doesn’t exactly threaten the foundations of our republic. They may also be afraid of getting swamped with angry e-mails from Macpsychos, but that strikes me as a side issue.
Which brings us to Geithner. He has more hands-on experience with financial crisis than anyone else on the planet (it’s not just the last two years; he was also Treasury’s point man during the emerging markets crises of the late 1990s). While the Three Bailout Musketeers of Geithner, Hank Paulson, and Ben Bernanke have been less than spectacularly successful in their recent efforts, one can hope that as the undisputed leader of the financial rescue Geithner would be capable of putting together a more coherent and definitive plan. And there’s the question of time: It would probably take weeks to get another candidate lined up, vetted and confirmed.
Put all that together, and what you probably get is our new Treasury Secretary, Tim Geithner.