"People think Wall Street and our economy are in a mess? They have nothing on what we're going through here," said a career Treasury Department official after learning yesterday that former U.S. Securities and Exchange Commission member Annette Nazareth had withdrawn from consideration to serve as deputy Treasury secretary.
Senior White House officials were telling reporters on background last night that Nazareth withdrew from consideration because initial feedback from the Senate on her possible nomination was that she would endure a tough confirmation process due to her role at the SEC directing oversight of market regulation. But associates of Nazareth familiar with the situation say that there were other reasons for her to pull out. "She simply lost confidence in [Treasury Secretary Timothy] Geithner," says a colleague of Nazareth's at the law firm, Davis Polk & Wardwell. "There's a lot of that going around, we hear."
Nazareth's decision is doubly embarrassing for the Obama White House because, her husband, Roger Ferguson, current CEO of TIAA-CREFF and former Vice Chairman of the Board of Governors of the Federal Reserve System, currently serves on the Economic Recovery Advisory Board, a post he was given by Obama.
Creating further confusion at Treasury, Caroline Atkinson, who currently works at the International Monetary Fund, also withdrew from consideration as undersecretary for international affairs. According to Treasury and Capitol Hill sources, her decision was linked to possible tax situations similar to that of Geithner.
"We have no one here. There is no leadership," says another senior career Treasury official. "I've never seen anything like it. We have a secretary who seems to have no understanding of what his job entails, and no one in the White House seems to either know it or want to acknowledge it. We have people making decisions who shouldn't be making decisions, and in positions where we should have people making decisions about our domestic economy, our banking system and our Wall Street recovery plan, we have no one. People should be alarmed by this, but no one seems to care."
Currently, the only Senate-confirmed undersecretary is Stuart Levey, undersecretary for terrorism and financial intelligence, but he is a Bush Administration confirmee, held over by the Obama Administration.
Late Thursday night rumors swirled around the Obama White House that Lee Sachs, a former assistant Treasury secretary in the Clinton Administration, who worked on the Obama transition team and who was "pitching in" in an advisory role for Geither, was also mulling withdrawing from consideration for a senior Treasury post.
Both Treasury officials who spoke on background say that there is a growing lack of confidence within the department over Geithner. One said, "He is a nice man, but he is out of his depth."
On Wednesday, according to a senior Democratic leadership aide, Sen. Max Baucus, chairman of the Senate Finance Committee, was "underwhelmed" by Geithner's performance during testimony on the budget. "I think it's safe to say that at least the Senate Democratic leadership is less than pleased with the performance of this White House and this Treasury Department. It's a ***damned mess."
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