New York Federal Reserve Bank President Timothy J. Geithner will be nominated by President-elect Barack Obama to be the country's next secretary of the Treasury, sources tell ABC News.
Pending Senate approval, Geithner will take over one of the most important cabinet positions as the country struggles through a financial crisis and what could be a lengthy recession.
Stocks soared late this afternoon when news reports first started to surface that Geithner's nomination will be made official Monday. The Dow Jones industrial average ended the day up 494.13 points, or 6.5 percent.
It was very good news after two dismal days on Wall Street. Obama's Treasury picks seems to have pleased many investors who are apparently happy with Geithner's familiarity with the markets.
If you examine the life story of Geithner you may think he and Obama are brothers, separated at birth.
That similarity could be the tipping point that gets Geithner the nomination as the next treasury secretary and that leads the nation through the worst financial crisis since the Great Depression
While few people on Main Street have heard his name, all of Wall Street knows it well. He is the man who has been a principle architect of various plans aimed at rescuing the nation's financial institutions.
From the collapse of Bear Stearns earlier this year to the lifeline to save insurance giant AIG to the aggressive steps taken by the Federal Reserve System in the last few weeks to thaw the frozen credit markets, Geithner has been at the center of the storm.
The parallels between Geithner's story and Obama's are uncanny. Both men are 47 years old and spent part of their youth living abroad. Both have succeeded despite unusual backgrounds. Both men have developed a cadre of powerful and well-connected people who provide advice and guidance. And both men like the occasional pickup basketball game.
Just as Obama lived for a time overseas, so did Geithner. His father worked for the U.S. Agency for International Development and then for the Ford Foundation where he held several positions throughout Asia. Geithner attended elementary school in New Delhi and high school at the International School in Bangkok.
Geithner, Similar to Obama
Geithner attended Dartmouth, like his father and current Treasury Secretary Henry Paulson, where he earned degrees in government and Asian Studies. While in school, he studied Chinese and spent two summers living in Beijing. He also met his future wife Carole Sonnefeld at Dartmouth. Later, Geithner received his master's degree in international economics at Johns Hopkins where he also studied Japanese.
Living abroad, his father Peter said, exposed Geithner to people from different backgrounds. "I have been most impressed by his ability to bring people with diverse interests together around a table to find some kind of effective solution or steps to be taken."
Upon graduating, he worked for former Secretary of State Henry Kissinger for three years before moving to the Treasury Department where he worked for nearly 15 years. Starting as an assistant attaché in Japan, he eventually came to work for Treasury Secretaries Robert Rubin and Lawrence Summers and played a key role in the government's response to the Asian financial crisis in the late 1990s.
After a brief stint at the International Monetary Fund, Geithner was selected in 2003 to lead the Federal Reserve Bank of New York. That bank, one of 12 across the country, is responsible for implementing the monetary policy established by the Federal Reserve in Washington, including maintaining the key Federal Funds interest rate that banks charge one another for overnight loans.
In this role, Geithner is the point person between Wall Street and the central bank. During the course of the recent financial crisis, he has earned the respect of hard-charging investment bank CEOs, even though he does not have a doctoral degree in economics or a master's in business administration and he has not worked on Wall Street.
Like Obama, he has risen even while bucking the normal route to success.
And like the president-elect, he has reportedly surrounded himself with a group of experienced advisers that include such economic luminaries as former Federal Reserve chairmen Alan Greenspan and Paul Volcker; former Treasury Secretaries Summers and Rubin; former New York Federal Reserve chief Gerald Corrigan; Merrill Lynch CEO John Thain; and well-respected financial leader and co-founder of private equity giant Blackstone Pete Peterson, with whom he meets on occasion over breakfast.
Candidate as New Treasury Secretary
Peterson ran the search committee that chose Geithner to lead the Federal Reserve Bank of New York. He said that during the vetting process, it became clear that beyond "unfailingly and unambiguously positive references," Geithner's colleagues and previous bosses felt he is "clear thinking and clear speaking in a crisis and not at all reticent to speak his views." Peterson added, "That is something important in a town like Washington."
"Tim would be terrific, cool-headed, experienced, and with kind of flexible mind needed to take the big steps required to deal with the current economic catastrophe," said Harvard professor Ken Rogoff who worked with Geithner at the IMF. "I think it is important also that the new administration not strangle the private sector, Tim is a centrist who would be sensitive to this issue."
Obama's choice for treasury secretary will face at least three major challenges: develop a more coordinated plan to resuscitate the nation's flailing economy, create new regulations to oversee the financial industry working closely with Congress and establish new trade policies with foreign partners especially China.
Geithner has firsthand experience with the recent economic bailouts, has worked with Congress, has a working knowledge of Chinese and has negotiated trade deals.
While young and perhaps lacking the experience of other candidates who have been suggested as possible choices for treasury secretary, what Geithner, a registered independent, may embody for the president-elect is the "change" that was a centerpiece of his campaign.