WASHINGTON, Jan 26 (Reuters) – U.S. Treasury Secretary Timothy Geithner is in the eye of a political storm as he tries to deflect congressional inquiry into his role in bailing out insurer AIG and battle a perception that his influence is diminishing.
The White House on numerous occasions in recent weeks has reiterated its support for Geithner, a former New York Federal Reserve Bank president sworn in as Treasury chief one year ago.
A decision last week by President Barack Obama to start a fight with banks by limiting their size seemed to highlight an expanding policy role for Obama economic adviser and former Fed Chairman Paul Volcker, with Geithner less visible.
Following are five challenges Geithner must grapple with as the administration tries to buttress the economy and tamp down questions about steps taken to counter the financial crisis.
* AIG BAILOUT
The bailout of insurance giant American International Group Inc has dogged Geithner for his entire first year in office, raising questions about decisions he made as head of the New York Fed to pay off the insurer’s bank counterparties in 2008. As Treasury secretary, he failed to halt hundreds of millions of dollars in bonus payments to AIG executives, stoking populist anger and cementing a public perception that he is a creature of Wall Street’s bailout culture — even though he is a lifelong public servant.