Treasury Secretary Timothy F. Geithner has signaled to White House officials that he's considering leaving the administration after President Barack Obama reaches an agreement with Congress to raise the federal debt limit, according to three people familiar with the matter.
Geithner hasn't made a final decision and won't do so until the debt-ceiling issue has been resolved, according to one of the people. All spoke on condition of anonymity.
The Treasury secretary has said that the United States risks defaulting on its obligations if Congress doesn't raise the $14.3 trillion debt ceiling by Aug. 2. The administration and Republicans in Congress are at an impasse in negotiations to raise the limit, which is tied to efforts to cut the nation's long-term deficit.
Moody's Investors Service said on June 2 that it expects to place the U.S. government's Aaa credit rating under review for a possible downgrade if there is no progress on the debt limit by mid-July. Fitch Ratings said June 21 it would place the U.S. on a negative rating watch if no action was taken by Aug. 2.
An exit by Geithner would complete the turnover in Obama's original economic team, with Council of Economic Advisers Chairman Austan Goolsbee scheduled to leave in early August to return to the University of Chicago.
That would leave Obama with two key posts to fill as Republicans are seeking to turn the 2012 election into a referendum on Obama's handling of the economy and as the recovery is slowing. The unemployment rate rose to 9.1 percent in May, according to the Labor Department, and the economy grew at a 1.9 percent pace in the first quarter, according to Commerce Department figures released June 24.
Jen Psaki, a White House spokeswoman, declined to comment.
"Geithner leaving may raise the level of uncertainty for the direction of economic policy, and that is never a positive thing for the markets and the recovery," said Christopher Sullivan, who oversees $1.7 billion as chief investment officer at the United Nations Federal Credit Union in New York.
Still, he said, it wouldn't have too much "shock value," especially if Geithner remains at Treasury until the debt ceiling is settled, "which is the most pressing concern anyone would have."
Investors may be more interested in who would come after Geithner.
"The question in cases like this is always who will be the replacement," said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee. "You can't judge if this is good or bad for the market until you see who follows."
The market was "comfortable" with Geithner because he was "a visible player in trying to blunt the crisis," Mueller said.
Geithner, 49, has told associates he needs a break from government service after dealing with the turmoil that followed the collapse of Wall Street firms, including Bear Stearns Cos. and Lehman Brothers Holdings Inc., first as president of the Federal Reserve Bank of New York and then as Treasury secretary.
Family considerations also are playing a role in Geithner's deliberations, according to the people. His son has decided to finish his final year of high school in New York.
If Geithner does leave the administration, Obama would be losing a member of his economic team who understands Washington institutions and the New York banking world as well as the intricacies of the Chinese economy. Geithner has pressed the Chinese to let their currency appreciate faster to reduce the global imbalances that both he and Obama have blamed for financial uncertainty.
After Obama's victory in the 2008 election, Geithner had a rocky start in Washington as he faced Senate scrutiny over his failure to pay self-employment tax returns while he worked at the International Monetary Fund. He paid some of the taxes after being audited by the Internal Revenue Service and didn't pay the rest until it was clear that he would be nominated for the Treasury post, according to the Senate Finance Committee.
His initial moves to return financial markets to health were rebuffed by Wall Street. On Feb. 10, 2009, when Geithner unveiled a plan to bolster the banking system, the Standard & Poor's 500 stock index tumbled 4.9 percent.
As Obama's presidency progressed, and the economy began to recovery, Geithner's stature grew.
"Tim was very influential from Day One," said former CEA Chairman Christina Romer. "His public persona has just caught up with what has always been true inside the White House."
Former President Bill Clinton said he "honestly didn't know" whether business confidence might be hurt if Geithner leaves.
"I think what people want is predictability now," Clinton said in an interview with Bloomberg Television Thursday in Chicago. "We've absorbed a lot of change, we've absorbed a lot of trauma."
Clinton, who called Geithner "a very smart man," said he hadn't heard that the Treasury secretary was considering leaving.
